On Saturday, China announced tariffs of up to 100% on Canadian canola, pork, and other food products. This move was in response to Canada’s decision last August to impose high taxes on imports of Chinese electric vehicles, steel, and aluminum.
The new tariffs, set to take effect on March 20, appear to send a strong message to Canada—and indirectly to Mexico—not to align too closely with the United States on trade matters. Both the Trump and Biden administrations have pushed Canada and Mexico to avoid becoming entry points for low-cost Chinese goods under North American trade agreements.
China’s State Council Tariff Commission revealed plans to impose a 100% tariff on Canadian canola oil and canola meal—two significant exports to China—along with peas. Additionally, Canadian pork and seafood will face a 25% tariff. According to the commission, these measures directly respond to Canada’s 100% tariffs on Chinese electric vehicles and 25% tariffs on steel and aluminum that came into effect last October.
Canada Mexico Trade
China’s Ministry of Commerce called on Canada to “immediately correct its wrong practices,” urging the removal of restrictions and the mitigation of negative effects. Meanwhile, the Canadian government has yet to provide a statement.
Chinese officials carefully worded their announcements to align with World Trade Organization rules, avoiding direct references to Canada or Mexico in their trade talks with the United States.
However, Chinese state media left little doubt about the intent behind the tariffs. A commentary from China Central Television framed the move as a strategic response, warning countries considering higher tariffs on Chinese products under U.S. influence.
Prime Minister Justin Trudeau introduced tariffs on Chinese imports last year, partly to safeguard domestic investments in electric vehicle production. The decision also followed growing concerns in the U.S. about the rising flow of Chinese goods into Canada. These concerns, echoed by both the Biden and Trump administrations, highlighted Canada’s dependency on the American market for steel, aluminum, and other manufactured goods.
China’s new tariffs target Canadian canola and agricultural exports, clearly reminding Canada of its importance as a trading partner. Last year, Canada exported nearly $1 billion worth of canola oil and meal—used in cooking and animal feed—to China.
China imports from Canada.
Separate from these tariffs, China is investigating potential anti-dumping issues with Canadian canola seed exports, which were valued even higher in 2022. In the months before these tariffs, Canadian traders rushed to supply Chinese stockpiles, leading to a surge in exports.
Beijing had initially suggested in September that it would take a year to respond to Canada’s tariffs. Still, it acted sooner following the Trump administration’s recent imposition of 25% tariffs on Canadian and Mexican imports.
Although some tariffs were quickly suspended for specific goods, China opted for a more immediate counteraction.
China’s trade relationship with Canada somewhat differs from its dynamic with Mexico. For every dollar of goods China imports from Canada, it exports nearly three dollars’ worth in return. The trade imbalance is even more significant with Mexico, where China exports nearly five dollars in goods for every dollar it imports.
This growing trade influence has been especially evident in Mexico, where sales of Chinese gasoline-powered cars have surged, often overtaking American and European brands.
Saturday’s announcement also dredges memories of a previous trade dispute between Canada and China. From 2019 to 2021, China imposed tariffs on Canadian canola after Canadian authorities arrested Huawei executive Meng Wanzhou at the request of the U.S.
During this time, China detained two Canadians under harsh conditions, while Meng was allowed to live in her Vancouver mansion. The three parties eventually reached an agreement that saw the release of all detainees, but the incident deeply affected public opinion of China in Canada.
