Al Mussell
China looks at slapping tax on Canadian canola
Why? Retaliation after Canada decided to tax China’s vehicles
Farmers Forum staff
OTTAWA — The Trudeau government recently threw agriculture under the bus by imposing a 100 % tariff on affordable Chinese-made electric vehicles, according to agricultural analysts.
The Canadian tax was an all-in attempt to protect a Canadian EV manufacturing sector that barely exists despite $37.4 billion in taxpayer largesse since 2021.
In response to the Trudeau tariff, China is threatening to slap retaliatory duties on Canadian canola that will price the crop out of the crucial Chinese market. China started the process with an investigation. As an economic force, Canadian field crop production, including canola, dwarfs the still-dinky Canadian EV sector. Only one fully electric vehicle model is currently produced in Canada, a specialized commercial delivery van made by 1,600 workers at General Motors’ Ingersoll assembly plant since late 2022.
Statistics Canada reports that 114,800 people worked in field crop production in 2023 — and canola was a huge chunk of that. Canola exports in 2023 reached $6 billion, according to the Canola Council of Canada. That’s about 20 % of all field crop exports according to StatCan. Most canola is exported, and China is the second largest buyer, gobbling up almost a third of Canadian canola exports.
Canadian canola producers have been side-swiped by disputes between Ottawa and Beijing before. Last time, China blocked imports of canola for three years — between March 2019 and May 2022 — after Canada arrested a Chinese telecom executive in response to an American extradition request. That experience made Beijing’s reaction to Ottawa’s EV tariff all the more predictable.
The situation highlights Canadian agriculture’s vulnerability in a world where countries increasingly embrace protectionism and more brazenly wield trade policy to their individual advantage, according to a new agri-food policy note released by co-authors Al Mussell and Ted Bilyea. “There is a pattern of agri-food becoming the go-to target for trade retaliation, and for political tensions spilling over into agri-food,” they write in their new report, Canada Needs to be More Proactive with its Industrial Policy, and Lead with Agri-Food.
“It is likely that Canada will face more trade actions against agri-food in the future — and in relation to other matters, that really have nothing to do with agri-food,” said Bilyea, research associate at the Rockwood, Ontario-based think tank, Agri-Food Economic Systems.
The authors point out that Canadian agriculture is especially exposed because of its heavy reliance on exports, leading to lower prices for Canadian farmers and their suppliers if trade is disrupted.
They warn that Canada’s pursuit of lithium battery production as part of an intended shift away from gas- and diesel-powered vehicles “will be met by strategic or opportunistic retaliation” targeting the agri-food sector. They suggest this could also lead to predatory foreign investment or outright acquisition of weakened agribusinesses and farms.
Al Mussell, the research lead, advised that Canada “needs a rapid pivot to anticipate a future of adverse effects from large countries’ industrial policies, and a less friendly international trade environment … We need a mixed strategy — with our own industrial policies, new trade alliances, but also supporting the system of trade rules we have now. Canadian agri-food policy needs to align with this — it represents a big shift.”
