China has announced retaliatory tariffs on Canadian agricultural products, escalating tensions in an ongoing trade dispute between the two nations. The new measures, set to take effect from 20 March, will impose a 100% tariff on Canadian rapeseed oil, oil cakes, and peas, while aquatic products and pork will face a 25% levy.
The move follows Canada’s imposition of import duties on Chinese-made electric vehicles (EVs) and steel and aluminum products in October last year. At the time, Ottawa implemented a 100% tariff on Chinese EVs and a 25% tariff on steel and aluminum imports, aligning with similar measures taken by the United States and the European Union over concerns of unfair competition and market distortions.
China’s Customs Tariff Commission criticised Canada’s tariffs as “discriminatory” and in violation of World Trade Organization (WTO) rules, arguing that they infringe on China’s legitimate trade interests. The Chinese commerce ministry also noted that the delayed response to Canada’s October measures was due to capacity constraints, as Beijing has been managing multiple trade disputes with the US and EU.
Notably, China’s new tariffs exclude canola, which was one of Canada’s top exports to China before Beijing launched an anti-dumping probe into the product last year. The exclusion of canola could indicate that China is keeping the door open for potential negotiations. In 2023, Canada exported $3.7bn worth of canola to China, accounting for over half of its total canola exports.
Analysts suggest the timing of China’s tariffs may be a strategic warning to Canada. “By striking now, China reminds Canada of the cost of aligning too closely with American trade policy,” said Dan Wang, China director at Eurasia Group. Some also speculate that China may be waiting to see the outcome of Canada’s national election, which must be held by 20 October, before deciding on further trade actions.
China is Canada’s second-largest trading partner, though trade volumes lag significantly behind those with the US. In 2023, Canada exported $47bn worth of goods to China, according to Chinese customs data.
Chris Davison, president and CEO of the Canola Council of Canada, said the impact of the new tariffs would be “felt across the industry,” as the levels are high enough to significantly hinder trade.
The Canadian government has not yet responded to China’s announcement.
