China Imposes 75.8% Temporary Duties on Canadian Canola, Escalating Trade Tensions

In a move that intensifies the ongoing trade conflict between China and Canada, the Chinese government has implemented provisional anti-dumping duties of 75.8% on Canadian canola imports. This decision, effective from Thursday, is seen as a direct response to Canada’s previous tariffs on Chinese electric vehicle imports and could significantly impact the global canola market.

Background of the Trade Dispute

The conflict began in August of the previous year when Canada imposed tariffs on Chinese electric vehicles. In retaliation, China launched an anti-dumping investigation into Canadian canola in September 2024, which concluded that Canada’s canola industry had been substantially supported by governmental subsidies. The provisional duty rate announced is part of this ongoing trade skirmish, with a final decision expected by September 2025.

Market Impact and Reactions

Following the announcement, the Intercontinental Exchange (ICE) November canola futures fell by 6.5%, hitting a four-month low. Industry experts express shock and concern over the steep duties. Tony Tryhuk from RBC Dominion Securities described the move as unexpected and shocking, emphasizing the severe impact it could have on the trade of Canadian canola to China.

‘This is huge. Who will pay a 75 percent deposit to bring Canadian canola to China? It’s like telling Canada that we don’t need your canola, thank you very much,’ remarked a Singapore-based oilseed trader.

Broader Implications for Global Trade

This development not only affects the canola industry but also adds tension to Canada’s trade relations with the world’s two largest economies, as Canada faces tariffs from the United States as well. Additionally, China has targeted other Canadian agricultural products, such as pea starch and halogenated butyl rubber, with similar investigations and duties.

Analysts suggest that replacing Canadian canola will be challenging, particularly for China’s aquaculture sector, which relies heavily on imported canola for animal feed. Despite potential opportunities for countries like Australia to fill the gap, the abrupt nature of these duties is likely to disrupt the market significantly in the short term.

Potential Outcomes and Next Steps

China has the option to extend the investigation deadline by six months, with a final ruling that could potentially alter or uphold the preliminary duties. The decision also puts pressure on the Canadian government to navigate through these trade frictions effectively. Responses from Canada’s trade, agriculture, and prime minister’s office are pending.

As the situation develops, the global trade community remains on alert, watching closely how these duties will influence not only bilateral relations but also the broader geopolitical economic landscape.