China escalates Canada trade spat with more canola levies
The 75.8 per cent duty on rapeseed, known in Canada as canola, will be imposed by the Asian nation from Aug 14 after a preliminary ruling that Canadian imports constitute dumping, according to a statement from China's commerce ministry. Benchmark futures in New York tumbled as much as 6.6 per cent following the announcement, reaching the lowest level since April.
Earlier this year, Beijing imposed a 100 per cent tariff on rapeseed oil and meal from the North American nation, in response to Canadian levies on Chinese-made electric vehicles, steel and aluminium. The latest measures leave Ottawa battling trade wars on two fronts, following the implementation of duties from US President Donald Trump.
With farmers set to harvest their canola in a few weeks, 'this announcement introduces a significant element of uncertainty about the market for this year's crop', said Chris Davison, chief executive officer of the Canola Council of Canada. China is the largest importer of Canadian canola seed, taking in C$4 billion (S$3.7 billion) worth in 2024, and demand from the country is often a telling signal for farmers, he said.
The 75.8 per cent deposit requirement, combined with the 100 per cent tariffs on oil and meal, 'would suggest to us that the Chinese market will be effectively closed to the Canadian industry', Davison said.
China has targeted Canada's supply before, halting shipments of canola in 2019. This time, it comes as Beijing is also locked in a trade dispute with the US, another of its top oilseed suppliers. The country has not yet booked any US soybeans for the upcoming marketing year, according to data as at late July, and Trump this week urged China to boost its purchases.
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'It is unusual for the top importer of oilseeds to court trade friction with a second of the largest exporters,' Mike Verdin, a consultant at CRM AgriCommodities, said.
China's probe found Canada's rapeseed sector received significant government subsidies, and supply and demand was distorted, a separate statement from the commerce ministry shows. Beijing will continue the investigation and make a final decision based on its findings.
The move could throttle trade flows and threaten supplies of rapeseed meal, a key animal feed ingredient considered essential for China's massive aquaculture sector. Beijing has been making efforts to diversify its supply, tapping producers from Australia to India.
The Asian nation imported 6.4 million tonnes of rapeseed last year, with almost of all of the shipments coming from Canada, according to Chinese customs data. The trade was worth more than US$3 billion.
For Canadian canola, demand from other markets, such as Japan, Europe and Mexico, could temper some of the price shock, Verdin said. Still, discounts are likely and the country will be more reliant on domestic crushing, he said. BLOOMBERG
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