China has responded to Canada’s trade tariffs by imposing duties on over $2.6 billion worth of agricultural and food products. The move comes after Ottawa introduced levies on Chinese-made goods in October, escalating tensions between the two nations.
New Tariffs Take Effect on March 20
China’s commerce ministry announced that the new tariffs will take effect on March 20. These measures mirror Canada’s 100% and 25% import duties on Chinese electric vehicles, steel, and aluminum. In response, China will impose a 100% tariff on over $1 billion worth of rapeseed oil, oil cakes, and pea imports from Canada. Additionally, a 25% duty will be applied to $1.6 billion worth of Canadian aquatic products and pork.
Canola Excluded, Leaving Room for Negotiation
One notable omission from China’s tariff list is canola, one of Canada’s top agricultural exports. This suggests that Beijing may be keeping the door open for trade talks. Last year, China launched an anti-dumping investigation into Canadian canola imports, but the latest tariffs do not target this sector. Analysts believe this could be a strategic move to leave room for negotiations.
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Trade Tensions and Political Influence
Trade analysts see this retaliation as a warning shot to Canada. China may be signaling that aligning too closely with U.S. trade policies comes at a cost. The Trump administration has hinted at easing tariffs on Canada and Mexico if they mirror U.S. duties on China, particularly regarding fentanyl-related trade restrictions.
Canada imposed its levies in response to what Prime Minister Justin Trudeau described as China’s state-driven industrial overcapacity, following similar actions by the U.S. and the European Union. In turn, China is now using tariffs as leverage, possibly waiting to see if a change in Canada’s government in the upcoming October elections could lead to a shift in trade policy.
China’s History of Trade Retaliation
China has used trade restrictions as a political tool before. In 2020, Beijing banned or heavily taxed key Australian exports such as barley, wine, beef, coal, lobster, and timber after Australia pushed for a COVID-19 origins investigation. However, after Australia’s government changed in 2022, China began lifting restrictions in 2023.
Analysts suggest that China may adopt a similar approach with Canada, using trade measures to apply pressure until a more favorable political climate emerges.
Canada’s Economic Ties with China
Despite tensions, China remains Canada’s second-largest trading partner, though far behind the United States. In 2024, Canada exported $47 billion worth of goods to China, according to customs data. While this trade dispute intensifies, both nations may still have incentives to negotiate and restore trade relations in the future.
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