Canada ‘will respond to US trade threats’ over electric car subsidies

Image copyright Getty Images Image caption Navdeep Bains, Canada’s minister of innovation, science and economic development, says Canada’s position “is as strong as ever”

Canada has vowed to continue its effort to curb vehicle subsidies for electric vehicles, as officials in Washington warn of a possible trade war.

Navdeep Bains, Canada’s minister of innovation, science and economic development, issued the warning after the US government’s head of trade said the actions could lead to levies.

Mr Bains warned it would be “very concerning” if the US responded to government initiatives.

The US and Canada are key parts of the world’s automotive sector.


The statements from Ambassador Robert Lighthizer came after the administration said it would remove the electronic logging device (ELR) mandate from the highway bill.

Its repeal will allow many truck companies to opt out of installing the recorders, forcing the US to rely on less-reliable paper logs, which some argue is dangerous.

Dozens of companies had said they would no longer comply with the mandate if it was rescinded, particularly those who will supply more expensive, full electric vehicles.

Mr Bains had previously warned that Canada would retaliate by attempting to restrict imports of US autos.

“Canada will continue to uphold and defend its national interests in this area,” he said on Monday.

In a further rebuke, Foreign Minister Chrystia Freeland, said she would meet with Mr Lighthizer to discuss a possible response.

“I don’t believe we can live with this kind of behaviour by the United States, and we will respond in the coming days,” she told reporters.

‘Not allowed to do anything’

Motorists want the US to curb funding of electric vehicle schemes as well as SUV subsidies.

But the subsidy schemes – particularly a $7,500 (£5,354) “cash grant” – don’t go far enough, says David Livingston, co-owner of a New York vehicle dealer that sells Tesla cars.

Mr Livingston is so keen to see the cash grant cut that he has issued a tweet calling for more US automakers and brands to join Tesla’s European venture.

Image copyright Getty Images Image caption Energy Secretary Rick Perry also criticised Canada’s announcement

Republican political analysts say the greatest fear in the GOP is that the tariff threats could lead to a full-scale confrontation with Canada.

Republican Senator Ted Cruz from Texas said last week that Mr Trump could have a “pretty good argument” to use tariffs to “take a stand”.

A former ambassador to Canada described the US response as “incredibly naive”.

“I honestly think they are not going to follow through and start erecting tariffs. This is the president’s mouth but he does not have the authority to do that,” Peter Clark, who served as ambassador to the UK, told Canadian Business.

“I don’t think they will, at least not on this scale.”

But the Canadian government said it was prepared to “vigorously defend its national interests”.

Reuters reported that Mr Trump had complained to Mr Lighthizer about the move to establish a German-founded global body to resolve trade disputes.

Just last month, Vice President Mike Pence pushed through new tariffs on Chinese steel.

– This article was amended on 21 January 2019 to remove an erroneous reference to diplomatic cables that suggested US and Canadian officials were in a “back channel” around trade.

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