New Chinese tariffs on Canadian agricultural and food products took effect Thursday in retaliation to Canada’s levy on Chinese-made electric vehicles enacted by the Trudeau government last fall.
Canadian exporters will now have to contend with an additional $3.7 billion worth of tariffs on agricultural and food products at the same time there’s an escalating trade war with the United States.
“The problem with protectionism is that it’s a negative sum game, destroying prosperity on both those who impose tariffs and those whose goods and services are targeted by tariffs,” Renaud Brossard, vice president of communications at the Montreal Economic Institute told True North.
While the Canada-China trade relationship pales in comparison to that of its trillion-dollar trade relationship with the U.S., the effects will certainly still be felt as the two countries import and export a combined figure of roughly $100 billion annually.
According to trade data compiled by the Observatory of Economic Complexity “in 2023, Canada exported $31.1 billion to China.”
“The main products that Canada exported to China were Crude Petroleum ($3.95B), Gold ($3.93B), and Rapeseed ($3.02B). Over the past 5 years the exports of Canada to China have increased at an annualized rate of 6.09%, from $23.1B in 2018 to $31.1B in 2023,” the observatory said.
Beijing said it was forced to respond to Canadian tariffs on EVs as well as its 25 per cent levy on Chinese steel and aluminum which had “seriously violated the rules of the World Trade Organization” and “damaged China’s legitimate rights and interests.”
The retaliatory measures include a 100 per cent tariff on Canadian canola oil, oil cakes and pea imports, as well as a 25 per cent levy on Canadian pork and aquatic products.
China’s state broadcaster CCTV said, “it is not difficult to find alternative sources of goods imported from Canada, but for Canada, its alternative market space has been sharply compressed, which means Canada has to bear more losses.”
This will be a major hit to Canada’s canola industry with prices plummeting from the onset of the tariffs being first announced earlier this month.
Canada exported nearly $5 billion in canola products to China last year and it accounts for the country’s second-largest market. Canola growers in the Prairies have requested help from Ottawa to mitigate the impact felt by farmers.
China also procures large quantities of Canadian seafood products, namely lobster, which has already forced retailers to slash prices.
The Fisheries Council of Canada called the new 25 per cent levy an “existential threat” to the industry, saying that tariffs from both China and the U.S. have “effectively cut off” 83 per cent of Canada’s seafood export markets globally.
China is Canada’s second-largest fish and seafood consumer after the U.S., importing $1.3 billion in products last year.
Additionally, China is the third-largest export market for Canadian pork after the U.S. and Japan, with over $43 million in exports last year.
“While our trade with China is only a fraction of our trade with the United States, it doesn’t make these tariffs and counter-tariffs any less problematic,” said Brossard.