In a significant escalation of trade tensions between Canada and China, Beijing has announced a formal investigation into Canadian canola imports, a key agricultural product for Canada. This move follows Canada’s recent decision to impose new border taxes on Chinese-made electric vehicles, steel, and aluminum. The announcement by China, which could potentially lead to the imposition of tariffs on Canadian canola, marks a notable intensification in the trade dispute between the two nations.
The Canadian government has yet to respond to China’s investigation, which comes in the wake of Canada’s recent tariffs. These tariffs were introduced as part of a broader strategy to address what Canada perceives as unfair trade practices by China, including subsidies and other forms of government support that, according to Canadian officials, give Chinese companies an unfair competitive advantage in the global marketplace.
In response to the tariffs, China has expressed its intention to challenge the measures at the World Trade Organization (WTO), labeling them as “discriminatory” and “unilateral.” A spokesperson for the Chinese Ministry of Commerce underscored the nation’s determination to “safeguard the legitimate rights and interests of Chinese companies,” highlighting China’s commitment to defending its trade interests through all available measures.
Canola, also known as rapeseed, is a major agricultural export for Canada, constituting approximately 25% of the country’s total farm crop receipts, according to the Canola Council, an industry association. The export of canola products, including raw seed, oil, and meal, is crucial to the Canadian economy, with over 90% of the canola produced in Canada being exported. Last year, China’s imports of Canadian canola were valued at approximately CAD 5 billion (USD 3.7 billion; GBP 2.8 billion), making China the second-largest market for Canadian canola after the United States.
The current investigation is not China’s first foray into trade disputes involving Canadian agricultural products. In 2018, following the arrest of Meng Wanzhou, Chief Financial Officer of the Chinese tech firm Huawei, China blocked canola exports from two major Canadian grain companies, citing pest concerns. This blockade lasted for three years and significantly impacted the Canadian grain industry.
The latest trade friction occurs against a backdrop of increasing protectionist measures by various governments, including those in the United States and European Union, which have imposed barriers against Chinese-made electric vehicles. Canadian Prime Minister Justin Trudeau’s recent announcement of tariffs on Chinese steel, aluminum, and electric vehicles reflect a growing sentiment among Western countries that Chinese firms are benefiting from substantial subsidies, leading to “dumping,” or selling products below cost to undermine competition.
China, in turn, has cited similar concerns of unfair competition in its investigation of Canadian canola oil imports. The Chinese Ministry of Commerce has noted a dramatic 170% increase in Canadian canola imports since 2023, accompanied by a continuous decline in prices, which it argues has adversely affected China’s domestic rapeseed-related industries.
In addition to the investigation into Canadian canola, China has also launched probes into European pork and dairy products. Despite allegations of dumping, China recently decided not to impose tariffs on French cognac, indicating a selective approach in its trade measures.The ongoing trade disputes underscore the growing complexity of global trade relations and the increasingly contentious interactions between major economic powers. As both Canada and China navigate these challenging trade dynamics, the outcomes of these investigations and subsequent actions will be closely watched by stakeholders in the global marketplace.
