A new study of 1,500 climate policies in 41 countries says subsidies don't work, pricing emissions does. So why are we awash in subsidies?
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Tariffs are becoming a part of high-cost protectionist industrial policies purportedly aimed at curbing greenhouse gas emissions. Mimicking the U.S., Canada is imposing a 100-per cent tariff on imported Chinese electric vehicles and a 25-per cent tariff on Chinese aluminum and steel. Trade-busting tariffs are not the real problem, however. The real problem is the growing debacle in climate-focused industrial subsidies.
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The Chinese are criticized for subsidizing EVs to grab global market share. China officially denies this in its response to the World Trade Organization’s regular review of its trade policy and the WTO has been unable to confirm or deny China’s position because financial information related to equity investments in its state-owned manufacturers is opaque. In the meantime, the U.S. and Canada, far from innocent in terms of subsidizing their own EV production, have retaliated with tariffs that will likely invite further Chinese retaliation. Tit for tat is just starting.
If Canadian and U.S. politicians really believed climate change is the “existential” threat they repeatedly say it is, they would welcome low-cost Chinese imports to encourage increasingly reluctant North American consumers to adopt EVs. Even better, Chinese subsidies for such cars would be a big saving for Canadian and American........