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LILLEY: Carney's canola tariff dilemma
Get the latest from Brian Lilley straight to your inbox Canola grows. Photo by Shannon VanRaes / Bloomberg When China slapped Canadian canola seed with a 75.8% tariff last week, the price immediately dropped more than $1 per bushel. While it's still trading higher now than the 10% price drop in March after China's first round of tariffs, it's still a drop farmers will feel. This advertisement has not loaded yet, but your article continues below. THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY Subscribe now to read the latest news in your city and across Canada. Unlimited online access to articles from across Canada with one account. Get exclusive access to the Toronto Sun ePaper, an electronic replica of the print edition that you can share, download and comment on. Enjoy insights and behind-the-scenes analysis from our award-winning journalists. Support local journalists and the next generation of journalists. Daily puzzles including the New York Times Crossword. SUBSCRIBE TO UNLOCK MORE ARTICLES Subscribe now to read the latest news in your city and across Canada. Unlimited online access to articles from across Canada with one account. Get exclusive access to the Toronto Sun ePaper, an electronic replica of the print edition that you can share, download and comment on. Enjoy insights and behind-the-scenes analysis from our award-winning journalists. Support local journalists and the next generation of journalists. Daily puzzles including the New York Times Crossword. REGISTER / SIGN IN TO UNLOCK MORE ARTICLES Create an account or sign in to continue with your reading experience. Access articles from across Canada with one account. Share your thoughts and join the conversation in the comments. Enjoy additional articles per month. Get email updates from your favourite authors. THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK. Create an account or sign in to continue with your reading experience. Access articles from across Canada with one account Share your thoughts and join the conversation in the comments Enjoy additional articles per month Get email updates from your favourite authors Don't have an account? Create Account China's latest canola tariffs are in retaliation for Canada imposing 100% tariffs on Chinese-made electric vehicles and 25% tariffs on Chinese steel and aluminum. The obvious answer to getting China's tariffs lifted on Canadian canola products is to lift our tariffs on EVs, steel and aluminum. The problem is, while the idea sounds sensible and simple, it's not that easy. In many ways, Canada is stuck between two economic giants involved in their own trade war. The Americans, under then-president Joe Biden, asked Canada to impose tariffs on Chinese goods. The claim is that these products are all heavily subsidized and dumped into North America to undermine our industries, harming our workers. Recommended video Your noon-hour look at what's happening in Toronto and beyond. By signing up you consent to receive the above newsletter from Postmedia Network Inc. Please try again This advertisement has not loaded yet, but your article continues below. While these tariffs came from Biden, Trump has left the American tariffs on these products in place. Any move to drop the tariffs on Chinese goods could have the impact of the United States imposing more tariffs on Canadian exports headed south. The problem for canola farmers, and this will give them no comfort, but canola is simply a product China likes to target in any dispute with Canada. For three years, starting in 2019, China had a ban on Canadian canola. That was in response to the arrest in Vancouver of Huawei executive Meng Wanzhou at the behest of the Americans in December 2018. China would go on to also kidnap two Canadians and hold them hostage, but on trade, they hit canola. In 2017, China began to complain that Canadian canola quality wasn't high enough and they slapped tariffs on seed exports. Let's be clear: These Chinese tariffs on canola should be removed but given China's past behaviour, there is no guarantee they would reciprocate. We could end up in a scenario where we remove our tariffs on Chinese goods, the United States places tariffs on more Canadian goods and China leaves their tariffs in place. This advertisement has not loaded yet, but your article continues below. Why would they do that? In order to obtain greater concessions from the Carney government, to try and encourage them to move Canada closer to China and away from the United States. This is what I mean about being caught in the middle of a bigger trade war between China and the United States. I understand the argument that the canola industry is strong, established, worth $40 billion and employs around 200,000 people while the EV sector is just starting to get off the ground. Allowing China to dump their vehicles into Canada, charging half the price it costs to make them, would seriously injure our entire auto industry, though not just the nascent EV sector. The tariffs Canada has imposed also extend to Chinese steel and aluminum though China is dumping their product, hurting our existing and vital steel and aluminum industries. This advertisement has not loaded yet, but your article continues below. China is simply a bad player, an untrustworthy trader and a market we should try not to rely on for any of our exports. Prime Minister Mark Carney has spoken often about diversifying our markets away from the United States; we should be doing the same with China. Replacing China would be difficult, but not impossible if markets like Japan, South Korea, India and Mexico were developed. That's a long-term solution for the next time China takes aim at our canola famers. In the meantime, there is simply a frustration across the Prairies that the Carney government favours Ontario and Quebec and doesn't care about them. That isn't helped by Carney's lack of action on this file. There may not be many good options but doing nothing is likely the worst option. Toronto Blue Jays NHL Money News Sunshine Girls World
