Canadian agricultural producers are warning of devastating impacts from latest Chinese tariffs that began Thursday, which they are saying will compound the economic strain from the U.S. trade war.
China has imposed a 100 per cent levy on Canadian canola oil and meal, in addition to peas, plus a 25 per cent duty on seafood and pork.
Those are on top of existing 25 per cent tariffs on a majority of exports to the U.S., which is about to usher in further “reciprocal” tariffs on April 2 that match those placed on American goods.
“When you’re a processor, you’re going to feel the pressure of this in a rather more meaningful way going forward,” said Erik Johnson, a senior economist and vice-president at Bank of Montreal Capital Markets.
For Tara Sawyer, an Alberta grain farmer and chair of Grain Growers of Canada whose crops include canola, the Chinese tariffs compound the tough time she and other farmers have faced over the past two to 3 years, with below-normal revenues on account of drought and rising operating costs.
The tariffs also come just weeks before seeding begins for this season’s crops.
“This makes what’s already been difficult quite devastating, really,” she told Global News.
Why did China impose these tariffs?
The tariffs are in retaliation against Canada’s 100 per cent levies on Chinese-made electric vehicles and a 25 per cent tax on aluminum and steel products, which were announced last yr.
The federal government has accused China of unfairly subsidizing its EV industry so as to get low-cost vehicles into North America, threatening Canada’s auto industry.
The EV tariffs matched similar levies imposed by the U.S. for a similar reason.
China launched “anti-dumping” investigations into Canadian canola imports in September 2024 in response, and announced the brand new tariffs on March 8 in consequence.
“It’s a punitive number made up by the Chinese regime,” Daniel Trefler, an economist and professor on the University of Toronto’s Rotman School of Management, said concerning the 100 per cent tariff on canola products.
“Canada is attempting to protect itself from what can be the whole collapse of our auto sector if we allow China to massively subsidize their autos…. [Canada’s EV tariffs on China] were arrived at after careful consideration and reflects the fact in China.”
The growing trade war has upended recent efforts to enhance relations between Ottawa and Beijing from the low point of 2019 and 2020, when Canada detained Huawei CFO Meng Wanzhou. China targeted canola exports in retaliation at the moment too, in addition to Canadian nationals in China.
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Relations are much more tense after it was revealed Wednesday that China has executed 4 Canadians for “drug-related crimes” this yr.
What could the impact be?
China is Canada’s top export marketplace for canola seeds, oil and meal. The Canola Council of Canada says economic activity with China was almost $5 billion last yr, including nearly $1 billion in canola meal.
Sawyer, who manages a 4,000-acre grain farm in Acme, Alta., says the brand new tariffs effectively shut the door on that market on account of the steep rate.
“Where are we going to be selling that canola, or can we?” she said. “It’s really stressful, and it’s changing on a regular basis. There’s a lot uncertainty.”
Johnson notes that canola seeds, which make up a majority of Canada’s canola trade, aren’t included in Thursday’s tariffs, although Beijing has said it is constant to analyze alleged dumping of those exports.
When China’s anti-dumping probes were first announced, credit agency Morningstar DBRS said resulting tariffs could lead on to a “billion-dollar hit” for the country and its supply chain.
The Canola Council of Canada estimates the industry lost between $1.54 billion and $2.35 billion between March 2019 and August 2020 from lost sales and lower prices on account of China’s previous tariffs.
Canola prices could fall further in Canada as producers look to unload product that was previously meant for Chinese export, Sawyer and economists say.
The Fisheries Council of Canada, meanwhile, said in an announcement this month that a 25 per cent Chinese tariff on seafood products is an “existential threat” to the industry. It said the mixture of tariffs from China and the U.S. will “effectively cut off” 83 per cent of Canada’s seafood export markets worldwide.
In line with the federal government, China is Canada’s second-largest fish and seafood export market after the U.S., with $1.3 billion in products shipped there last yr. Some export markets, like geoduck clams out of British Columbia and elvers within the Maritimes, rely almost exclusively on Chinese buyers.
As for pork, China is the third-largest export market behind the U.S. and Japan, with over $43 million in products exported over the past yr.
“These Chinese tariffs couldn’t have come at a worse time,” Keith Currie, president of the Canadian Federation of Agriculture, said in an announcement this month.
Trefler said while China’s tariffs may not impact inflation, they’ll have “huge” effects on employment and output, with farms potentially forced to put off employees or close altogether.
“It’s devastating not just for the person farmers but for the communities that surround those farmers,” he said.
Johnson said China’s actions, while destabilizing to specific industries, still pose less uncertainty than the ever-evolving trade policies out of the Trump administration within the U.S., which proceed to be the driving factor for recession fears.
“There’s already been some emphasis on [diversifying trade away from China] for years,” he said. “The challenge is, a few of that reshuffling has been toward a partner [the U.S.] that we’re now less certain of.”
How are governments responding?
The federal government and provinces where affected sectors are concentrated are being asked to support producers whose bottom lines might be hit.
Agriculture Minister Kody Blois said Wednesday that he has spoken together with his counterparts in Alberta and Saskatchewan about using “all of the tools in our toolbox, including our Business Risk Management programs, to support our canola, pea and pork farmers.”
“We’re focused on ensuring there are supports, to be certain that there are mechanisms in place to support those impacted producers,” he told reporters after a cupboard meeting in Ottawa. He said more details might be shared in the approaching days.
“This is important.”
Alberta’s government put aside $4 billion this yr to administer its response to tariffs, up $2 billion from the yr before.
Alberta Premier Danielle Smith told reporters Wednesday there was a possible for a “made in Canada solution” to make sure canola crops can get to market.
“I don’t have an answer for pork yet,” Smith said. “I actually have doubled my bacon intake as a measure of support.”
Manitoba’s budget, announced Thursday, included broad plans for tons of of hundreds of thousands of dollars for supports for businesses, agricultural producers and individuals, and in addition introduced latest tax measures to assist spur investment.
Saskatchewan, with a slim $12-million surplus in its budget tabled Wednesday, didn’t put aside money to assist manage the potential impact of tariffs.
Nova Scotia Fisheries Minister Kent Smith told reporters Wednesday that the federal government can provide assistance to seafood producers from its $200-million contingency fund established to take care of the impact of tariffs if vital.
But he also downplayed the potential short-term impact of China’s latest levies, saying he heard “cautious optimism” from producers at a three-day seafood expo he attended with Premier Tim Houston this week.
Industry groups say government will eventually must step in with latest supports to handle China’s tariffs specifically, saying the relief launched in response to U.S. tariffs won’t be sufficient.
Sawyer said she’s particularly concerned about farmers’ mental health as they take care of additional stress.
“Everybody is combating what to do,” she said.
— with files from The Canadian Press
