Analysts say China's decision to impose tariffs on Canadian farms and food is to prevent the expansion of the tariff war initiated by U.S. President Donald Trump.
Beijing announced tariffs on Canadian agriculture and food worth more than CAD$2.6 billion after Ottawa introduced taxes in October. The move opened a new front in the trade war that Trump began.
The tax plan announced by the Ministry of Commerce will take effect on March 20, with slapping 100% and 25% import duties on electric vehicles, steel and aluminum products made in China four months ago.
See also: China's trade fell in the first two months
By excluding Canola (also known as Rapeseed), one of Canada's largest exports to world No-1 agricultural importers, Beijing could open the door to trade negotiations before China launched an anti-dumping investigation last year.
But tariffs can also serve as a warning shot, analysts say, with the Trump administration saying the White House is threatening Canada and Mexico’s 25% import tax if they pay the same extra 20% on fentanyl flowing to Chinese goods.
“Canadian measures seriously violate World Trade Organization rules, constitute typical protectionist behavior, and are discriminatory measures that seriously undermine China's legitimate rights and interests,” the Ministry of Commerce said in a statement.
China will impose 100% tariffs on the import of Canadian rapeseed oil, oil cakes and peas just over $1 billion, and a 25% tariff on Canadian aquatic products and pork worth $1.6 billion.
“Warning not to align with U.S. policy”
“The timing may serve as a warning shot,” said Dan Wang, director of Singapore Eurasia China. “Through the current blow, China reminds Canada of the cost of being too close to U.S. trade policy.”
“China's delayed response to Ottawa's October tariffs may reflect capacity constraints and strategic signals,” she added. “The Department of Commerce's trade dispute with the United States and the EU is extended, disorganized.”
“Canada has a lower priority and must wait for its turn.”
The Canadian embassy in Beijing did not immediately respond to Reuters' request for comment.
Canada said in August that it would impose a levy fee to oppose Prime Minister Justin Trudeau China intends to guide overcapacity policiesAfterwards, both the United States and the European Union applied import taxes to electric vehicles made in China.
In response, China began an anti-dumping investigation into Canadian low rapeseed oil imports in September. According to the Canadian Low-Iron Na Board, half of Canada's exports of canola canola are used in China, with the industry worth 3.7 billion CAD.
“The investigation into Canadian low-cost stones is still underway. This time the low-cost list is not included, which may also be a gesture to leave room for negotiations,” said Rosa Wang, an analyst at agricultural consulting firm JCI.
Mark Carney becomes new PM
Beijing may also hope changes in the government — or leadership changes that may occur this week — will make Ottawa more adaptable.
Sunday's big news is Mark Carney – Former head of central banks in Canada and the UKplus the UN’s Climate Action Envoy – Winning the race to become the new leader of the Canadian Liberal Party.
He is expected to be sworn in Canada's new Prime Minister This week, though never before held a political position.
Carney is a highly respected crisis manager and can see where trade negotiations with Trump and China are located. He is expected to hold a national election soon by October 20. He swore on Sunday that Canada would never be a part of the United States.
Canada exported 47 billion Canadian dollars to China last year
At the same time, China is Canada's second largest trading partner, far behind the United States. According to Chinese customs data, Canada exported $47 billion worth of goods to the world's second largest economy in 2024.
China is Canada's most important pork export market. Cam Dahl, general manager of the Manitoba Pork Commission, said it needs products that are not easy for Canada to replace the market.
“For example, what we export to China is part of the animals, and these animals are not easy to other markets,” he said. “We can't take that container that is going to China and ship it to Mexico.”
Chris Davison, president and CEO of the Canadian Low Canola Committee, said China is Canada's low canola market.
“Of course, the level of (tariff) being talked about here is too good. … The impact will be felt throughout the industry,” he added, hoping to get financial support from the government.
A Canadian government spokesman did not immediately respond to a request for comment.
Beijing may seek contact
“Honestly, I don’t understand why they do this,” Trivium China’s agricultural analysts paid.
She added: “I expect Beijing will use the elections and changes of its leaders as an opportunity to reset relations with Australia.”
In 2020, a series of tariffs, bans and other restrictions on major exports of China to Australia, including barley, wine, beef, coal, coal, lobster and wood, in retaliation against Canberra, called for an investigation into Covid Origins.
Beijing did not start a ban until 2023, a ban that was removed by Australian Prime Minister Anthony Albanese, who called for an investigation.
- Jim Pollard's Extra Input and Editing by Reuters
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