Analysts say China’s decision to impose tariffs on farm and food products from Canada is a bid to prevent the tariff war started by US President Donald Trump from widening.
Beijing announced tariffs worth over $2.6 billion on Canadian agricultural and food products on Saturday after Ottawa introduced levies in October. The move opens a new front in a trade war started by Trump.
The levies, announced by the commerce ministry and scheduled to take effect on March 20, match the 100% and 25% import duties Canada slapped on China-made electric vehicles and steel and aluminium products four months ago.
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By excluding canola (also known as rapeseed), which was one of Canada’s top exports to the world’s No-1 agricultural importer, prior to China investigating it for anti-dumping last year, Beijing may be keeping the door open for trade talks.
But the tariffs also serve as a warning shot, analysts say, with the Trump administration having signalled it could ease 25% import levies the White House is threatening Canada and Mexico with if they apply the same extra 20% duty he has slapped on Chinese goods over fentanyl flows.
“Canada’s measures seriously violate World Trade Organization rules, constitute a typical act of protectionism and are discriminatory measures that severely harm China’s legitimate rights and interests,” the Commerce Ministry said in a statement.
China will apply a 100% tariff to just over $1 billion of Canadian rapeseed oil, oil cakes and pea imports, and a 25% duty on $1.6 billion worth of Canadian aquatic products and pork.
‘Warning not to align with US policy’
“The timing may serve as a warning shot,” said Dan Wang, China director at Eurasia Group in Singapore. “By striking now, China reminds Canada of the cost of aligning too closely with American trade policy.”
“China’s delayed response (to Ottawa’s October tariffs) likely reflects both capacity constraints and strategic signalling,” she added. “The commerce ministry is stretched thin, juggling trade disputes with the US and European Union.”
“Canada, a lower priority, had to wait its turn.”
The Canadian embassy in Beijing did not immediately respond to a Reuters request for comment.
Canada said in August it was imposing the levies to counter what Prime Minister Justin Trudeau called China’s intentional state-directed policy of overcapacity, following the US and European Union, both of which have also applied import levies to Chinese-made EVs.
In response, China in September launched an anti-dumping investigation into Canadian canola imports. More than half of Canada’s canola exports go to China and the trade was worth $3.7 billion in 2023, according to the Canola Council of Canada.
“The investigation on Canadian canola is still ongoing. That canola was not included in the list of tariffs this time might also be a gesture to leave room for negotiations,” Rosa Wang, an analyst with agricultural consultancy JCI, said.
Mark Carney to be new PM
Beijing may also be hoping that a change in government – or the leadership change likely to occur this week – will make Ottawa more amenable.
The big news on Sunday was that Mark Carney – a former central bank chief in both Canada and England, plus a UN envoy on climate action – won a race to become the new leader of Canada’s Liberal Party.
He is expected to be sworn in as Canada’s new prime minister this week, despite never having held political office before.
Carney is a highly regarded crisis manager and seen as well placed to manage trade negotiations with Trump, and China. He is expected to call a national election shortly, which must be held by October 20. He vowed on Sunday that Canada would never be part of America.
Canada sold $47bn of exports to China last year
China, meanwhile, is Canada’s second-largest trading partner, trailing far behind the United States. Canada exported $47 billion worth of goods to the world’s second-largest economy in 2024, according to Chinese customs data.
China is Canada’s third-most important pork export market. It takes products for which Canada does not have easy alternate markets, said Cam Dahl, General Manager of the Manitoba Pork Council.
“The things we export to China, heads for example, are parts of the animal that don’t have easy other markets,” he said. “We can’t take that container that’s going to China and just ship it to Mexico.”
China is Canada’s number-two market for canola, said Chris Davison, president and CEO of the Canola Council of Canada.
“The (tariff) levels that are being talked about here are prohibitive levels, for sure. … The impacts will be felt across the industry,” he said, adding that he would like to see financial support from the government.
Canadian government spokespersons did not immediately respond to requests for comment.
Beijing may seek a reset of ties
“To be honest I don’t understand why they are doing this one at all,” said Even Pay, agriculture analyst at Trivium China.
“I expect Beijing will use the election and change of leader as an opportunity to reset relations as they did with Australia,” she added.
China in 2020 introduced a series of tariffs, bans and other restrictions on key Australian exports, including barley, wine, beef, coal, lobster and timber in retaliation to Canberra calling for a COVID origins probe.
Beijing did not begin lifting the bans until 2023, one year after Australian Prime Minister Anthony Albanese ousted Scott Morrison, who had called for the inquiry.
- Reuters with additional input and editing by Jim Pollard
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