How China’s Market Dominance Tactics Call for Caution on EV Tariff Concessions

Aug 27, 2025 - 09:56 Updated: Aug 27, 2025 - 09:50

How China’s Market Dominance Tactics Call for Caution on EV Tariff Concessions

News Analysis

Beijing’s escalation of tariffs on Canadian agricultural products has prompted prominent voices such as Saskatchewan Premier Scott Moe to push Ottawa to drop its tariffs on Chinese EVs.

The argument is that Ottawa’s tariffs primarily benefit the central Canada-based EV sector, while Western farmers bear the cost of China’s retaliation, including its recent 75.8 percent tariffs on Canadian canola. Alberta Premier Danielle Smith has noted that China understands “divisions” in Canada and that it uses targeted tariffs to divide the country to Beijing’s advantage.

But Canada and other Western countries should be careful not to lose sight of the Chinese Communist Party’s generational targeted plans to dominate strategic sectors and make other countries dependent on it, warns Sheng Xue, a Chinese Canadian author and democracy activist.

She said in an interview that if Beijing’s economic practices go unchallenged, the regime “would convert its economic dominance into geopolitical leverage, undermining national sovereignty and policy independence.”

Since China has become a major export market for Canada’s agricultural sector, Beijing has used import blockages as a pressure point when circumstances don’t favour its interests, such as when Canada arrested Huawei executive Meng Wanzhou on a U.S. extradition request, or as seen now with the existing EV tariffs. By increasing Canada’s reliance on Chinese EVs, the country could be giving the communist regime additional leverage, creating another dependence to be exploited, in addition to losing its own domestic production capability, Sheng says.

Chinese leader Xi Jinping said in 2020 that Beijing should “increase the dependence of international supply chains on China and establish powerful retaliatory and deterrent capabilities against foreign powers that would try to cut supplies.”

China and the Canadian EV Market

Beijing has been putting increased focus on what it calls China’s “new trio”: solar photovoltaics, lithium-ion batteries, and electric vehicles.

A 2024 government-issued report describes these products as “shining stars in China’s foreign trade landscape,” characterized for being technology-intensive, high in added-value, highly competitive in exports, and related to green technology development.

Before Ottawa imposed tariffs on Beijing, imports of Chinese EVs grew dramatically from $84 million in 2022 to almost $2.3 billion in 2023, according to Canadian government data. Chinese-made EVs also increased their share of Canada’s EV sales market during that period, from 2 percent in 2022 to 11.3 percent in 2023.

He Xiaopeng, cofounder, CEO, and chairman of Chinese EV manufacturer Xpeng, speaks during the launch of a new electric vehicle in Beijing on Aug. 27, 2024. Pedro Pardo/AFP via Getty Images

Ottawa’s EV incentives also applied to vehicles that were made abroad, including in China. This prompted one China-based EV writer to ponder whether Canada was effectively making a “wedding dress” for Chinese electric vehicles.

Then, in 2024, the United States imposed 100 percent tariffs on Chinese-made EVs and 25 percent tariffs on steel and aluminum, along with additional duties in other strategic sectors, citing China’s “unfair” trade practices.

Canada shortly after followed Washington’s lead, imposing 100 percent tariffs on Chinese EVs and 25 percent tariffs on Chinese aluminum and steel products in October 2024. Ottawa also said the measure was aimed at protecting Canadian industries from “unfair” competition from Chinese producers, which it said “benefit from China’s intentional, state-directed policy of overcapacity and oversupply.”

While surveys indicate a decline in support among Canadians for upcoming electric vehicle mandates starting in 2026, in a free market scenario, EVs continue to represent a substantial share of consumer demand, with one out of every seven new cars sold in Canada in 2024 being EVs, according to Statistics Canada.

China’s Strategic Takeovers

The Chinese regime has used state subsidies for years to bolster domestic industries and gain dominance in strategic markets. The goal of this strategy is to eliminate competitors in targeted sectors and establish monopoly-like conditions in global markets, with China positioned as the dominant player.

Bulldozers scoop soil containing various rare earths to be loaded on to a ship at a port in Lianyungang, Jiangsu Province, China. STR/AFP via Getty Images

Democratic countries have in recent years raised concerns about China’s dominance in the production of critical minerals, which are key for a wide range of industrial sectors, including high-tech and defence. China had become the world’s leading refiner by 2023 of key minerals such as copper, cobalt, lithium, natural graphite, and rare earth elements–with 92 percent of refined rare earth production originating from China that year.

Heads of state at this year’s G7 Leaders Summit in Canada established an action plan to create “resilient critical minerals supply chains governed by market principles.”

“We recognize that non-market policies and practices in the critical minerals sector threaten our ability to acquire many critical minerals, including the rare earth elements needed for magnets, that are vital for industrial production,” the leaders said in a June 17 joint statement.

Another example is the steel sector, where between 2000 and 2015, China added more than 800 million tonnes of capacity and produced significantly more steel than the rest of the world, as cited by a 2024 U.S. government document. As global demand lowered and domestic U.S. steel producers were priced out of the market, the sector lost 100,000 jobs in the United States, the report said.

China spends significantly more on industrial support than other major economies, such as the United States, France, Germany, and Japan. Beijing’s industry subsidies in the form of direct subsidies, tax credits, or other financial assistance means reached at least 1.73 percent of GDP in 2019–more than four times that of the United States–surpassing its defence spending that year, according to a 2022 report by Washington-based think tank the Center for Strategic and International Studies.

The aluminum industry has likewise seen China’s production expand. China added more production capacity than the rest of the world combined between 2011 and 2016 than in the previous 25 years, according to the same report, which notes the expansion was driven by “strong state support for state-owned domestic firms through below-market credit and other instruments.”

Both steel and aluminum, on which Ottawa has levied tariffs against China, are considered strategic global sectors, supplying critical materials for industries like auto manufacturing, construction, and energy.

An employee looks on at steel rolls at a factory in Nantong, in China's eastern Jiangsu Province, on March 1, 2022. STR/AFP via Getty Images

The growth of EV production in China followed the regime’s launching in 2015 of its “Made in China 2025” plan, a 10-year economic strategy aimed at achieving 70 percent self-sufficiency in 10 high-tech industries, including electric vehicles. It also came after China launched its 14th Five-Year Plan (2021–2025) for economic and social development, which identified green technology as a key sector for the regime.

China accounted for 40 percent—the largest share—of global EV exports by 2024, according to the International Energy Agency.

China has denied the allegations that it creates overcapacity and distorts the global market, saying in a 2024 government report that its advantage over competitors “has been honed through diligent efforts and genuine expertise, rooted in market competition, innovation, and entrepreneurship.”

But the report by the Center for Strategic and International Studies notes that the rapid growth of China’s EV industry has largely been supported by government policies, including subsidies directed at domestically produced vehicles, tax credits for companies, and other forms of state assistance.

When Ottawa announced the implementation of 100 percent tariffs on Chinese electric vehicles in 2024, it cautioned against China’s “non-market support” for its EV sector and the consequences for the Canadian and global market.

“China’s pervasive use of non-market policies and practices has led to significant overcapacity in its EV production,” Ottawa said in its surtax order for the levies. “As a result, China is exporting EVs at unfairly low prices, distorting global trade.”

Trade Weaponization and Alignment of Values

Besides their economic impact, decisions on whether to keep or remove the tariffs could affect Canada’s future capacity to negotiate and act in accordance with its values, says Sheng Xue.

She told The Epoch Times that allowing China to dominate industries that are key for Canada would increase its dependence on Beijing.

“Excessive dependence on Chinese EVs and critical metals would leave Canada vulnerable to supply disruptions or price manipulation during political conflicts,” she said, adding it would also “weaken Canada’s leverage in negotiations on far more important issues such as human rights, transnational repression, and intellectual property theft.”

She says that lifting tariffs on Beijing to solve the canola dispute is not a viable solution. Instead, she says, Canada should be looking into diversifying its export markets for its agricultural products.

“Lifting tariffs might bring short-term relief, but the long-term costs far outweigh any benefits,” she said.

“Canola farmers do face real challenges, but the solution lies in diversifying export markets, not in becoming dependent on China’s single market.”