China slaps Canada with new tariffs on farm products in response to EV levy
Piling pressure onto a Canadian economy already suffering disruption due to new U.S. tariffs and threats of an all-out trade war, China on Saturday imposed new levies against $3.7-billion worth of Canadian agricultural and food products.
In a long-awaited response to Canada’s decision last August to impose a 100 per cent tariff on electric vehicles, Beijing said it was introducing equivalent levies on Canadian canola oil, oil cakes and pea imports, as well as a 25 per cent duty on Canadian pork and aquatic products.
In a statement, China’s State Council said the initial Canadian tariffs, which also included a 25 per cent levy on Chinese steel and aluminium, had “seriously violated the rules of the World Trade Organization” and “damaged China’s legitimate rights and interests,” leaving it with no choice but to respond.
Notably however, while canola oil was included, the much larger sectors of canola seed and meal were not, suggesting Beijing may be leaving room to negotiate — or escalate, said Rosa Wang, an analyst with agricultural consultancy JCI.
More than half of Canadian canola exports go to China, and one of the first responses China announced to the Canadian tariffs last year was an anti-dumping investigation into the $5-billion worth of Canadian canola products exported to China every year.
Beijing previously banned Canadian canola during a period of high bilateral tension following the arrests of Huawei executive Meng Wanzhou and Canadians Michael Kovrig and Michael Spavor. That ban was lifted in 2022 after three years, to the great relief of the canola industry.
“The investigation on Canadian canola is still ongoing,” Ms. Wang said. “That canola was not included in the list of tariffs this time might also be a gesture to leave room for negotiations.”
China is Canada’s second-largest trading partner, trailing far behind the United States. Canada exported $67.5-billion worth of goods to the world’s second-largest economy in 2024, according to Chinese customs data.
Saturday’s measures cover just 5 per cent of that trade, but they come as Canada is facing intense pressure from new U.S. President Donald Trump, who has repeatedly imposed and then paused 25 per cent tariffs against all Canadian and Mexican imports, a potentially devastating blow to the tightly-intertwined North American economy.
On Thursday, Mr. Trump announced yet another a tariff reprieve on all goods compliant with the United States-Mexico-Canada Agreement, which covers a significant portion of Canadian exports to the U.S. But he has promised to introduce 25 per cent tariffs on steel and aluminum imports, including from Canada, and threatened reciprocal tariffs on Canadian lumber and dairy products.
The whiplash announcements out of the White House have left Canadian business and politics reeling, and raised severe uncertainty as the country heads toward a federal election expected this spring.
The timing of the Chinese measures may be aimed at reminding Ottawa to consider relations with its second-largest partner at a time when all attention is focused south of the border.
Canada’s EV tariffs came after a similar move by the U.S. and following consultation with the Joe Biden administration, much to the chagrin of Beijing, which has always complained about Ottawa following the U.S. lead on foreign policy. In late February, current U.S. Treasury Secretary Scott Bessent encouraged Canada to follow Mexico in matching Mr. Trump’s new tariffs against China.
Speaking to the Global Times, a Chinese state-run newspaper, Shi Xiaoli, director of the Beijing-based WTO Law Research Centre, said it was important for China to send the message that “if any nations try to gain U.S. favour by imposing extra tariffs on China in return for the U.S. to lift tariffs on them, then China will also use tools to defend its own interests.”
In a social media post, state broadcaster CCTV for China “it is not difficult to find alternative sources of goods imported from Canada, but for Canada, its alternative market space has been sharply compressed, which means Canada has to bear more losses.”
Dan Wang, China director at Eurasia Group in Singapore, said Saturday’s tariffs seemed to be a “warning shot.”
“By striking now, China reminds Canada of the cost of aligning too closely with American trade policy,” she said, adding however the delayed response to last year’s measures may also reflect “both capacity constraints and strategic signalling.”
“The commerce ministry is stretched thin, juggling trade disputes with the U.S. and European Union,” Ms. Wang said. “Canada, a lower priority, had to wait its turn.”
Saturday’s tariffs come a day before Canada’s next prime minister is chosen by members of the ruling Liberal Party. Some Chinese analysts previously told The Globe and Mail there may be space for a reset in testy Sino-Canadian relations with the exit of Prime Minister Justin Trudeau, during whose period in office ties frayed significantly.
That could follow a pattern seen with Australia: relations between Beijing and Canberra entered a deep freeze in 2020 after then Prime Minister Scott Morrison called for an international investigation into the origins of the COVID-19 pandemic. That year, China imposed tariffs, bans and other restrictions on key Australian exports, including barley, wine, beef, coal, lobster and timber.
Beijing did not begin lifting the bans until 2023, one year after the opposition Labor Party ousted Mr. Morrison’s coalition and Anthony Albanese became prime minister.
While most observers are skeptical of a similar reset taking place between Canada and China — given the Conservatives are traditionally seen as being tougher on China than the Liberals — Mr. Trump’s aggressive posturing has scrambled geopolitics and left many countries seeking friends elsewhere, something Beijing has been keen to capitalize on.
Speaking this week, Chinese Foreign Minister Wang Yi hit out against Mr. Trump’s “America First” policies, saying “might does not make right” and framing China as the more responsible global actor.
“We are living in a changing and turbulent world, where certainty is becoming a scarce resource,” Mr. Wang said. “China’s diplomacy will stand firm on the right side of history and on the side of human progress. We will provide certainty in this uncertain world.”
This article was first reported by The Globe and Mail
