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China announced preliminary anti-dumping duties on Canadian canola imports on Tuesday, escalating a year-long trade dispute that began when Ottawa imposed tariffs on Chinese electric vehicle imports last August.
China's Ministry of Commerce said in a statement that the preliminary rate would be 75.8%, taking effect from Thursday.
The Canadian government rejected China's findings, stating on Tuesday evening that Canada does not dump canola on the market and expressing "deep disappointment" over Beijing's decision, while affirming it remained open to dialogue.
International Trade Minister Maninder Sidhu and Agriculture Minister Heath MacDonald said in the statement:
"Canada is committed to ensuring fair access to markets for our canola, and we remain ready to engage in constructive dialogue with Chinese officials to address mutual trade concerns."
Canada is now embroiled in trade disputes with the world's two largest economies, as its exports also face tariffs imposed by the United States. The US is the largest market for Canadian canola oil and meal, while China buys the majority of Canada's canola seed exports.
Chris Davison, president of the Canadian Canola Growers Association, said the tariff rate effectively closes the Chinese market to Canadian canola. Canada exported nearly C$5 billion (US$3.64 billion) worth of the oilseed to China in 2024.
Tony Tryhuk, a trader at RBC Dominion Securities, said:
"This was surprising and shocking."
China is the world's largest importer of canola, also known as rapeseed, sourcing nearly all of its needs from Canada. If these steep tariffs remain in place, they are likely to bring an end to imports altogether.
One oilseed trader in Singapore said:
"This is huge. Who is going to pay a 75% deposit to bring Canadian canola into China? It's like telling Canada: we don't need your canola, thanks very much."
China imposed tariffs on canola oil and canola meal in March, while Canada imposed tariffs on Chinese steel and aluminium.
China's Ministry of Commerce said the anti-dumping investigation, launched in September 2024, found that Canada's agricultural sector — particularly its canola industry — had benefited from substantial government subsidies and preferential policies.
The Canadian government and canola industry had previously rejected the dumping allegations, with the industry viewing China's complaint as being rooted in other ongoing trade and political disputes, according to Davison of the Canadian Canola Growers Association.
November canola futures on the ICE exchange fell following the announcement, ending Tuesday's session down about $30 at $650.30 per tonne.
A final review could result in a different rate, or the reversal of Tuesday's decision.
The move marks a shift from the more conciliatory tone struck in June, when Chinese Premier Li Qiang told Canadian Prime Minister Mark Carney during a phone call that there were no fundamental disagreements between the two countries.
Even Rogers Bai, an agricultural analyst at Trivium China, said:
"This move will put additional pressure on the Canadian government to resolve trade disputes with China."
Source: Reuters