China retaliates against Canada by imposing further agricultural tariffs

China opened a new front in a trade war primarily fueled by U.S. President Donald Trump’s tariff threats on Saturday when it slapped tariffs on more than $2.6 billion worth of Canadian food and agricultural exports, retaliating against levies Ottawa introduced in October.

The commerce ministry announced the taxes, which are set to go into effect on March 20. These levies are identical to the 100% and 25% import duties Canada imposed just over four months ago on steel and aluminum items as well as electric vehicles made in China.

Beijing may be keeping the door open for trade discussions by ignoring canola, also known as rapeseed, which was one of Canada’s top exports to the world’s top agricultural importer before China looked into it for anti-dumping last year.

However, analysts believe the tariffs also act as a warning shot because the Trump administration has hinted that it may lower 25% import taxes that the White House is threatening to impose on Canada and Mexico if they impose the same additional 20% charge he has placed on Chinese goods due to fentanyl shipments.

“Canada’s measures seriously violate World Trade Organization rules, constitute a typical act of protectionism and are discriminatory measures that severely harm China’s legitimate rights and interests,” the commerce ministry stated in a statement.

Just over $1 billion worth of Canadian rapeseed oil, oil cakes, and pea imports would be subject to a 100% tax from China, while $1.6 billion worth of Canadian pork and aquatic products will be subject to a 25% levy.

Dan Wang, China director at Eurasia Group in Singapore, stated, “The timing may serve as a warning shot.” “By striking now, China reminds Canada of the cost of aligning too closely with American trade policy.”

“China’s delayed response (to Ottawa’s October tariffs) likely reflects both capacity constraints and strategic signaling,” she stated. “The commerce ministry is stretched thin, juggling trade disputes with the U.S. and European Union.”

“Canada, a lower priority, had to wait its turn.”

A request for comment from Reuters was not immediately answered by the Canadian embassy in Beijing.

Following the United States and European Union, which have also imposed import levies on Chinese-made electric vehicles, Canadian Prime Minister Justin Trudeau announced in August that Ottawa was enacting the levies in response to what he described as China’s deliberate state-directed policy of over-capacity.

China responded by opening an anti-dumping probe into Canadian canola shipments in September. According to the Canola Council of Canada, China is the destination of over half of Canada’s canola exports, with a $3.7 billion transaction value in 2023.

“The Canadian canola study is still under progress. Rosa Wang, an expert with the agricultural consulting firm JCI, speculated that the exclusion of canola from the tariff list this time may also be an attempt to allow for negotiations.

Beijing may also be hopeful that Ottawa will become more accommodative after a change of administration. The next national election in Canada must take place before October 20.

After the United States, China is Canada’s second-largest trading partner. According to Chinese customs data, Canada sold $47 billion worth of commodities to the second-largest economy in the world in 2024.

“I don’t understand why they are doing this one at all,” Even Pay, a Trivium China agriculture specialist, said.

“I expect Beijing will use the election and change of leader as an opportunity to reset relations as they did with Australia,” she stated.

In 2020, China responded to Canberra’s demand for a COVID origins investigation by imposing a number of tariffs, prohibitions, and other restrictions on important Australian exports, such as barley, wine, cattle, coal, lobster, and lumber.

In 2023, a year after Australian Prime Minister Anthony Albanese removed Scott Morrison, who had demanded the investigation, Beijing started to ease the prohibitions.