China hits back at Canada with fresh agriculture tariffs

BEIJING - China announced tariffs on over US$2.6 billion (S$3.5 billion) worth of Canadian agricultural and food products on March 8, retaliating against levies Ottawa introduced in October and opening a new front in a trade war largely driven by US President Donald Trump’s tariff threats.

The levies, announced by the Commerce Ministry and scheduled to take effect on March 20, match the 100 per cent and 25 per cent import duties Canada slapped on China-made electric vehicles (EVs) and steel and aluminium products just over four months ago.

By excluding canola – which is also known as rapeseed, and was one of Canada’s top exports to the world’s No. 1 agricultural importer prior to China investigating it for anti-dumping in 2024 – 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 per cent import levies the White House is threatening Canada and Mexico with if they apply the same extra 20 per cent duty he has slapped on Chinese goods over fentanyl flows.

“Canada’s measures seriously violate World Trade Organisation 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 per cent tariff on just over US$1 billion of Canadian rapeseed oil, oil cakes and pea imports, and a 25 per cent duty on US$1.6 billion worth of Canadian aquatic products and pork.

Dr Dan Wang, China director at Eurasia Group in Singapore, said: “The timing may serve as a warning shot. By striking now, China reminds Canada of the cost of aligning too closely with American trade policy.”

She added: “China’s delayed response (to Ottawa’s October tariffs) likely reflects both capacity constraints and strategic signalling. 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.

Canadian Prime Minister Justin Trudeau said in August that Ottawa was imposing the levies to counter what he called China’s intentional state-directed policy of overcapacity, following the lead of the US and EU, 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 US$3.7 billion in 2023, according to the Canola Council of Canada.

Ms Rosa Wang, an analyst with agricultural consultancy JCI, said: “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.”

Beijing could also be hoping that a change in government in Ottawa makes it more amenable.

Canada’s next national election must be held by Oct 20.

China is Canada’s second-largest trading partner, trailing far behind the US. Canada exported US$47 billion worth of goods to the world’s second-largest economy in 2024, according to Chinese Customs data.

Ms Even Pay, agriculture analyst at Trivium China, said: “To be honest, I don’t understand why they are doing this one at all.”

She added: “I expect Beijing will use the election and change of leader as an opportunity to reset relations, as they did with Australia.”

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 for Canberra calling for a Covid-19 origins probe.

Beijing did not begin lifting the bans until 2023, one year after Australian Prime Minister Anthony Albanese ousted Mr Scott Morrison, who had called for the inquiry. REUTERS