Letter to Prime Minister regarding impact

December 5, 2024

The Right Honourable Justin Trudeau. P.C., M.P.
Prime Minister of Canada
Office of the Prime Minister
80 Wellington Street
Ottawa, ON K1A 0A2

Dear Prime Minister,
I am writing to provide insights from Canada’s electric vehicle supply chain – including critical minerals and materials, batteries, component, and vehicle manufacturing – regarding the potential imposition of a 25% tariff on all goods imported from Canada into the United States.

After consulting broadly across this ecosystem, it is clear such tariffs would devastate Canada’s competitiveness in EV, component and battery production. Given the deeply integrated nature of our supply chains, this policy would also severely harm North America’s EV sector, undermining our shared economic and national security. Ironically, this policy would serve to further entrench China’s market dominance of these advanced technologies – a scenario both nations seek to avoid.

These tariffs would have the perverse effect of pushing existing Canadian critical minerals and materials overseas instead of to U.S. customers to advance a North American supply chain.  At the same time, aspiring critical mineral companies would find it even more difficult to raise needed capital. This would render the ambition to transform Canada into an important critical minerals and materials producer even more remote and further weaken the prospect of a secure North American supply chain de-risked from China.

Such a policy would also make it harder for Canadian firms to collaborate with U.S. partners on clean energy technologies. This would slow our innovation and make North America less competitive overall. Tariffs would almost certainly push production into other markets and away from North America, eroding both countries’ positions in clean energy and manufacturing.

As the Government of Canada continues to engage with the incoming U.S. Administration, we encourage you to focus on the following priorities:

1. To counter autocratic regimes dominating key technology supply chains, including for electric vehicles, Canada and America must work as closely together
   as possible to develop North American alternatives. With the U.S. lacking sufficient domestic supply of critical minerals to meet its manufacturing needs for batteries, magnets and other enabling technologies, Canada can play a vital role as a reliable partner.
2. Beyond alignment in principle, this requires public investment into our own supply chain, including into domestic minerals and materials projects, as well as more efficient project development. Such decisiveness would demonstrate that Canada is serious aboutprioritizing the sustainable development of our critical resources for a North American supply chain. It would also signal to investors and to firms further downstream, including OEMs and battery manufacturers, that we are serious about positioning Canada as a trusted critical minerals and materials provider.
3. A 25% tariff on Canadian imports would harm U.S. businesses, appearing as a direct cost increase on invoices and raising consumer prices.
   Decades of integrated supply chains mean U.S. companies rely on Canadian vendors, and finding alternatives would add further inefficiencies, undermining North American competitiveness. We know that the Government is consistently communicating this message, but we feel it is important to highlight that there would be no guessing as to why business costs have jumped so suddenly.  Under the proposed tariff scenario, much higher costs – and ultimately higher consumer prices in the U.S. – would be both a short and long-term phenomenon.
4. Canada needs a proactive and cohesive ZEV industrial strategy to clearly determine the value we aim to create through critical mineral and materials development, battery and ZEV manufacturing, and to develop the programs and policies to drive that value creation. This approach should also define how Canada creates value for North America, supports industry collaboration, and enhances competitiveness while reducing reliance on China.

Exactly one year ago, Accelerate released a report, which captured the thinking of the most senior executive leaders from across our domestic EV supply chain. One of the four areas of emphasis was that “Canada is best positioned if it sees this industrial opportunity as one focused primarily on North America. The reasons include the existing critical mass of vehicle production within the USMCA region, the availability of Canada’s natural resources, and a growing consensus that the EV sector’s heavy reliance on China represents a significant source of both geo-political and supply chain risk.”

This continues to be the case. We must work now to advance an industry that is competitive and enriches both of our nations. Canadian policymakers and industry leaders must continue to build and show the value of our EV supply chains by investing in and sustainably accelerating mineral and midstream projects and supporting domestic manufacturers and innovators. In so doing, we can make Canada’s position in this industry so invaluable to the future of North America’s economy and geopolitical security, that jeopardizing it would be unimaginable.

Yours sincerely,

Matthew Fortier
President and CEO, Accelerate ZEV

About Accelerate ZEV:
Accelerate is Canada’s industrial alliance of key actors from critical mineral mining, batteries, fuel cells, R&D, the public sector, labour, vehicle manufacturing and infrastructure. Together, we are building Canada’s Zero Emission Vehicle supply chain and industry to ensure it is a central part of Canada’s future wealth and prosperity.