Industry and Technology Committee on May 4th, 2026

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

Thank you very much.

I have a question about the order's impact.

We conducted an emergency study over the course of several meetings, to hear from representatives of small and medium-sized enterprises and understand the situation they are facing. Most of them were not affected by the 50% tariffs on steel and aluminum components. However, the executive order that took effect on April 6 imposes tariffs of 25% on the total value. They're telling us that, as a result, they can no longer export to the United States.

All the business associations told us that offering loans as a form of assistance wasn't an option, because companies are already heavily in debt, particularly due to the pandemic and inflation. Even the Regional Tariff Response Initiative is insufficient. It's a great program for boosting productivity, but the SMEs that signed up for it had to go into debt themselves to buy new machinery. Furthermore, they told us they couldn't use it once it was up and running, since they could no longer export to the United States.

During question period, your colleague Mr. LeBlanc said that he wasn't closing the door and that more would be done if needed.

Do you agree with that position?

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

Yes, absolutely.

First, various business groups across the country, such as chambers of commerce, asked us to revive the Regional Tariff Response Initiative, or RTRI. We expanded it to include softwood lumber, everything related to forestry, and everything related to copper. Obviously, it still covers steel and aluminum. Under this program, we offer non-repayable loans—grants, in other words—to businesses making investments to acquire equipment, which are known as capital expenditures.

We're trying to help businesses by reducing that dependence on the United States. I understand this isn't an easy approach. I know it's difficult and that it involves changing business models for many entrepreneurs. It certainly comes with risks, but our goal is to help them take that risk, because we cannot allow ourselves to become dependent on the U.S. market again. We are developing new markets. Our goal is to create a domestic market, including across the various provinces, to increase demand.

That said, for larger companies, we are offering a program—through BDC—similar to the one offered during the pandemic. The program was very well received at the time. We are bringing it back because we believe it's the way to help businesses, given the extraordinary circumstances. Extraordinary times call for extraordinary measures.

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

Thank you for your answer.

Many of the companies exporting to the US are SMEs. They're worried about how long it will take to secure contracts in the domestic market or find other partners. Right now, there's a shortage of skilled labour—whether it's welders, operators, or machinists. So, if companies stop paying them, these people will go elsewhere, and then they won't be able to go back.

The support program for modernizing equipment and so on is great for boosting business productivity, but the urgency is very short-term. We're talking about next week and next month. Some businesses are afraid they won't be able to make it until July, for example, because they've just lost 60% of their revenue.

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

I understand, and that's why the BDC program also provides liquidity. So it's money for—

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

But that's geared towards large companies.

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

Actually, it does range from $5 million to—

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

I believe it's closer to $2 million.

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

You're correct, it is $2 million. My apologies. It ranges from $2 million to $50 million, but the company must have at least $5 million in revenues. Given that level of earnings, we're not talking about a very large company either. The company must also have lost approximately 20% of its revenue because of the tariffs.

We will see how things unfold. This is the first time we've gone this far. The conditions were different for the softwood lumber sector, but we're prepared to work to ensure the same conditions apply to that sector. As you can see, the government is taking its tariff response a step further, because we know this is a series of events, including the increase in tariffs, the fact that there is a new interpretation, and so on.

We have also worked very hard to provide predictability. This is a three-year loan. In the first year, there are no payments due. In three years, a number of things will have occurred in the United States, and we'll see what happens. Until then, we're buying time, but businesses really need to work on reducing their dependence, because we can't just sit and wait. That's a strategy that relies on nostalgia, and nostalgia is not a strategy.

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

Thank you.

[The Chair, Liberal, Ben Carr]

Thank you, Mr. Ste-Marie.

Madame Dancho, the floor is yours for five minutes.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Thank you, Mr. Chair.

Thank you, Minister, for being with us today.

In September 2024, when you were foreign affairs minister, you imposed a 100% tariff on Chinese EVs. You called it an EV surtax order because “increasing Chinese EV imports [is] expected to undermine the growth and development of the Canadian EV industry” and other comparable vehicles. That's what you said in the Gazette.

As you know, 15 months later, in January 2026, you struck a deal with China to allow 49,000 Chinese EVs into Canada at a much lower tariff rate. I'm reading this and thinking that you've made a deal with China that directly undermines the Canadian auto industry. That's in your own words based on your assessment from September 2024.

I'm deeply concerned about this. I'm trying to figure out why you aren't.

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

Things have happened since the trade war started. Our North American market was disrupted by 25% tariffs. In these circumstances, what did we do? We made sure that we were able to get a good deal—

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

I'll just ask a follow-up there. I'm not clear how—

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

I'll finish my answer.

[The Chair, Liberal, Ben Carr]

Colleagues, this happened last time, so I'm going to suggest that we take the same route, which I think worked. I'm not going to hold the clock against you, Madame Dancho, to allow the minister to reply at a length similar to your question. The same will be true the other way around. We don't need to fight the clock here. The purpose is for us to have a thorough discussion.

I'm going to give you about 20 seconds to reply.

Madame Dancho, I pressed pause, and I won't resume the clock until the minister is finished.

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

To finish my answer, we were able to get to a deal [Inaudible—Editor] with China in order to make sure that our farmers, including those in Mr. Falk's riding, will be able to continue to export their canola to China. Also, our fishers in Atlantic Canada will be able to export their product to China in exchange for a small—2.6%—quota of EVs coming from China. That is similar to the 2023 contingent of cars.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Thank you, Minister.

That's actually not small when compared to how many EVs overall were sold in 2023. It's not small at all. In fact, it represents quite a large percentage of EVs sold in Canada before you put that tariff on them.

You mentioned that bringing them in would put “unwarranted downward pressure on pricing, challenging the profitability of Canadian producers” and would reduce choice by crowding out other imports. Again, I'm not clear on how this is good for competition in Canada when you're importing a heavily subsidized car that we can't hope to compete with. How does this help our auto sector?

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

When you look at them, the cars that have been coming in are mainly Teslas, Polestars made by Volvo, and Fords. That's the reality, because western OEMs, western carmakers, also have joint ventures and have been producing in China as well. That's the case across the world.

We were able to limit the number of cars in exchange for support to our farmers and fishers. At the same time—

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Thank you, Minister.

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

I'll finish my sentence.

We've made clear conditions in order for Chinese car companies to do joint ventures with Canadian car companies here at home to basically build in Canada.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Again, a year and a half ago, you said, in black and white, that this was going to undermine the Canadian auto sector, and now here we are and you're bringing in almost 50,000 annually.

I also want to talk about how the Americans recently launched a section 301 investigation into Canada and other countries over the failure to enforce forced labour. I'm sure you're very familiar with the forced labour concerns. It was, in fact, your government that passed a law to stop forced labour, but of course, we've heard testimony at this committee and others that aluminum, for example, is using the forced labour of the Uyghurs. I'm quite concerned, as I know others are, that this could jeopardize our trade negotiation with the Americans. Are you concerned?

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

We have applicable laws regarding forced labour. We have an entire regulatory process. We have a private member's bill that passed a couple of years ago that is applicable, and we'll follow it.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

It seems to be that Uyghurs are being forced. It's forced labour for those who are making these automobiles that you're willingly importing into Canada. Actually, that was one of the issues you cited 15 months ago as to why you didn't want to do this.

I'll just quote Margaret McCuaig-Johnston, who said, “Canadians don't want to be driving cars made by slaves.” Would you agree?

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

Of course.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Then why is it that you're allowing the import of 49,000 cars that may in part be made by modern slave labour?