China has announced a new investigation into Canadian canola imports, adding fuel to the growing trade conflict between the two countries. The investigation, which could result in tariffs on one of Canada’s most important agricultural exports, follows Canada’s recent decision to impose new tariffs on Chinese-made electric vehicles (EVs), steel and aluminum. The situation adds another chapter to the ongoing trade tensions between the two countries.
China reacts to Canadian tariffs with canola investigation
The Chinese Ministry of Commerce announced its plans to launch an anti-dumping investigation into Canadian canola oil imports, citing a significant increase in imports – 170% since 2023 – and a continued drop in prices. A ministry spokesperson stressed that China would take “all necessary measures” to protect the rights and interests of its domestic companies.
The decision comes just a week after Canada imposed border taxes on electric vehicles, steel and aluminum imported from China, a move that Beijing has criticized as “discriminatory” and “unilateral.” The Chinese government also announced it would lodge a formal complaint with the World Trade Organization (WTO) against Canada’s EV tariffs.
Canada’s response: Concern over canola investigation
Canada’s Agriculture Minister Lawrence MacAulay expressed grave concern over the Chinese investigation into Canadian canola imports, given the importance of canola to the country’s agricultural economy. “Canadian farmers depend on and abide by a rules-based global trading system that provides reliable market access,” MacAulay said. “We will continue to defend and support the sector every step of the way.”
Canola, known for its use in cooking oil, animal feed and renewable energy, is a vital export for Canada, accounting for nearly one-quarter of the country’s agricultural crop receipts. With more than 90% of its canola production exported, China has been one of its biggest buyers, buying about C$5 billion ($3.7 billion; £2.8 billion) worth of canola last year, making it the second-largest market for Canadian canola after the United States.
Growing tensions over trade practices
The conflict between Canada and China reflects broader tensions over trade practices and the global market for electric vehicles. Canadian Prime Minister Justin Trudeau defended the EV tariffs by accusing countries such as China of creating an unfair advantage for themselves in the global market. Western countries, including Canada, the US and the EU, have raised concerns that Chinese companies benefit from significant government subsidies and engage in “dumping” – selling products at below-market prices to outcompete foreign rivals.
China, on the other hand, claims that its actions, including the canola investigation, are legitimate responses to unfair practices by its trading partners. Chinese officials argue that Canada has been engaging in unfair trade practices by allowing canola exports, which are allegedly subsidized and dumped at low prices, to hurt Chinese producers.
History of disputes: Huawei incident and aftermath
This is not the first time canola has been at the center of China-Canada trade disputes. In 2018, following the arrest of Huawei executive Meng Wanzhou in Vancouver on a US extradition request, China halted imports from two major Canadian grain companies for three years, citing pest concerns. Meng’s arrest strained diplomatic relations between the two countries, leading to retaliatory measures from both sides.
The current investigation into Canadian canola comes amid a broader wave of Chinese trade investigations targeting Western agricultural products, such as European pork and dairy. Despite these investigations, China recently decided not to impose tariffs on French cognac, despite similar allegations of dumping, highlighting the selective nature of its trade measures.
Global trade implications
The trade dispute between Canada and China is part of a growing pattern of global protectionism, particularly in the electric vehicle sector. The US and the EU have raised similar barriers against Chinese EV imports, citing concerns of unfair competition and impact on domestic industries.
China’s decision to challenge Canada’s EV tariffs at the WTO underscores its determination to combat what it sees as discriminatory trade policies. However, the outcome of such disputes remains uncertain and prolonged trade tensions are likely.
Impact on global markets and future negotiations
The ongoing trade disputes are likely to have an impact on global markets, particularly in the agricultural and automotive sectors. As China investigates Canadian canola imports and takes legal action against Canada’s EV tariffs, the possibility of further retaliation cannot be ruled out.
For Canadian farmers, the canola investigation presents a significant challenge, potentially disrupting a major export market. However, the Canadian government has vowed to stand against it