China Imposes New Tariffs on Canadian Agricultural Products

China has announced the imposition of tariffs on Canadian agricultural and food exports valued at over $2.6 billion, marking a significant retaliatory measure against Canada's earlier tariffs implemented in October. These new tariffs, revealed by the Chinese Ministry of Commerce, are set to take effect on March 20 and correspond to the 100% and 25% import duties Canada applied to Chinese electric vehicles and steel and aluminum products four months prior.

In a strategic move, Beijing has excluded canola, one of Canada's major exports to China, from the list of taxed commodities. This exclusion may indicate a willingness to keep avenues for trade discussions open, especially following last year's anti-dumping investigation into Canadian canola.

The new tariffs include a substantial 100% duty on Canadian rapeseed oil, oil cakes, and pea imports, totaling just over $1 billion, along with a 25% tariff on approximately $1.6 billion worth of Canadian aquatic products and pork. Analysts suggest that this timing serves as a reminder to Canada about the potential repercussions of aligning too closely with U.S. trade policies.

According to the Chinese Ministry of Commerce, Canada's actions violate World Trade Organization regulations and represent protectionist measures detrimental to China's legitimate trade rights. Dan Wang, an analyst at Eurasia Group, remarked that China's delayed response was likely due to resource constraints and the need to manage ongoing trade disputes with the U.S. and the European Union, thus relegating Canada to a lower priority.

In a statement regarding the tariffs, Canadian Prime Minister Justin Trudeau pointed to the need for these measures to combat what he described as China's state-directed over-capacity policies. This follows a trend seen in the U.S. and the EU, both of which have also enacted tariffs on Chinese goods.

The tension escalated further when China initiated an anti-dumping investigation into Canadian canola imports in September, impacting a trade valued at $3.7 billion in 2023, as noted by the Canola Council of Canada. The ongoing investigation into canola imports, which has not yet concluded, may have influenced the decision to exclude this commodity from the recent tariff list, suggesting a potential opening for negotiations.

Beijing may also be looking ahead to Canada's upcoming national elections, scheduled to occur by October 20, hoping for a shift in government that could lead to more favorable relations. China is Canada's second-largest trading partner, with Canadian exports to the country reaching $47 billion in 2024, as per customs data from China.

Some analysts remain puzzled by China's decision to implement these tariffs now, with suggestions that the Chinese government might be waiting for potential changes in Ottawa's leadership to reset relations, similar to its approach with Australia after the change in government there.

In 2020, China imposed various tariffs and restrictions on Australian exports, which were only lifted in 2023 following a change in leadership in Australia. This historical context may indicate a strategic approach by China in managing its trade relationships.