Tariff Wars Impact the Canola Market: Consequences for Canada and China

In October 2024, Canada imposed a 100% tariff on Chinese electric vehicles and a 25% tariff on steel and aluminum from China. This was part of a new trade strategy, as Canada plans to expand tariffs on Chinese solar panels and critical minerals in early 2025, as well as on semiconductors, permanent magnets, and natural graphite in 2026.

This is reported by AgroReview

Escalation of Trade Tensions

Since March 20, China has introduced tariffs on agricultural and food products, totaling over 2.6 billion Canadian dollars. This list includes:

• 100% tariff on Canadian canola oil, meal, and peas;
• 25% tariff on seafood and pork.

The tariffs imposed by the U.S. on Canada starting in February 2025 will only exacerbate the negative consequences for the global canola market. The escalation of trade tensions has already significantly impacted the canola seed, oil, and meal markets, as Canada, the U.S., and China are key players in these markets.

Impact on Exports and Prices

Canada accounts for 42% of the world’s canola exports, 52% of the canola oil market, and 59% of canola meal exports. There have been historical disputes between Canada and China regarding canola. In 2019, China suspended imports from Canada, citing phytosanitary reasons, although it was likely a political response to the Canadian government’s decision.

The consequences of this “canola war” were very serious: canola exports to China fell by 70%, canola prices in Canada dropped by 10-15% due to the loss of a major market, and the domestic market in Canada faced product surpluses. Farmers began to reduce canola planting areas and seek alternative crops such as barley, wheat, and flax.

Canada took several years to regain its share of canola exports to China. However, new import tariffs on canola oil and meal may cause similar problems. It is expected that once the tariff wars conclude, negotiations and mutual concessions on trade issues will take place, although the extent of the consequences depends on how quickly conflicts are resolved.

The full version of the article is available to subscribers of the “BLACK SEA & DANUBE OILSEED REPORT” analytical report.