China tariffs on Canada canola: Here’s what you need to know

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Canada’s canola industry, which includes farmers and a growing crushing and processing industry, is entering uncertain times as China moves to impose 100 per cent tariffs Thursday while also operating under the threat of looming tariffs from the United States.

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Canadian canola meal and oil faces 100 per cent tariffs from China starting on March 20. The provinces of Saskatchewan, Alberta and Manitoba have been lobbying the Canadian government for help for farmers, but no relief has yet been announced.

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Meanwhile, canola producers also face possible 25 per cent tariffs from the U.S. starting April 2, along with potential reciprocal tariffs as part of U.S. President Donald Trump and his administration’s attempts to overhaul trade policy.

Here’s what you need to know about the tariffs on Canadian canola and what they mean for farmers and beyond.

What tariffs are being imposed on canola and why?

Tariffs are taxes imposed on goods that are imported into a country. They are paid by the importer with the revenue collected by that country’s federal government.

The Chinese government said it will impose tariffs of 100 per cent on canola meal and oil starting on March 20. China will also impose 100 per cent tariffs on peas and 25 per cent tariffs on seafood and pork.

China is imposing the tariffs following an anti-dumping investigation into Canadian canola, undertaken by the Chinese government in September of 2024 after the Canadian government joined the U.S. in imposing a 100 per cent tariff on Chinese-made electric vehicles along with a 25 per cent tariffs on steel and aluminum. Dumping refers to when goods are sold in a jurisdiction for a lower price than in their country of origin. The Government of Canada has denied the dumping allegations.

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So far, canola seed has been exempted from China’s March 20 tariffs. But China is currently conducting an anti-dumping investigation into the crop and tariffs could be possible in the future.

China’s tariffs aren’t the only ones the canola industry faces. The Trump administration is also threatening Canadian canola with tariffs, which could be imposed at a rate of 25 per cent on top of any reciprocal tariffs, on April 2. Though we don’t yet know how much reciprocal tariffs might cost, some reports indicate they could be equivalent to the rate of a nation’s sales tax.

The U.S. tariffs are part of the Trump administration’s plan to reshape the country’s trade relationship globally, though the administration has zeroed in on Canada and Mexico, its two largest trade partners. Trump has cited concerns about fentanyl crossing into the U.S. from both countries and the current trade deficit the U.S. is running with Canada as reasons for imposing tariffs.

How important is canola to the Canadian economy?

In 2024 Canada exported $920-million worth of canola meal to China along with $20-million worth of oil. Saskatchewan accounted for half of Canada’s overall canola oil exports and 41 per cent of canola meal exports. That same year Canada sent $4-billion worth of canola seed to China.

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In 2024 Canada exported $7.7-billion worth of canola meal and oil to the U.S, making it the largest taker of Canadian value-added canola. Canada exported just under 300,000 tonnes of canola seed south of the border.

What do the tariffs mean for canola farmers?

Producers were in a precarious spot even before China announced its plans to impose its tariffs.

Bill Prybylski, president of the Agricultural Producers Association of Saskatchewan (APAS), said the threat of across-the-board tariffs from the U.S. has left Canadian farmers with limited options.

“Tariffs are applying to everything, so if you’re going to switch from one (crop), where do you go from there?” he said.

It may be too late for farmers to change their growing plans anyway. Prybylski said farmers generally plan their crop rotations over three-to-four years ahead of time. He said he isn’t aware of any farmers changing their crop plans amid the current uncertainty.

What can farmers do?

APAS has called on the Saskatchewan provincial government to stand up for producers and advocate for the industry.

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The Canola Council of Canada, an industry association which represents people and organizations all through the supply chain from growers to processors, is calling for the federal government to reach out to the Chinese government.

“We urge the federal government to immediately engage with China, with a view to resolving this issue,” said Chris Davison, the council’s chief executive.

Canada’s newly installed Minister of Agriculture Kody Blois said in a posting on X, formerly known as Twitter, that he recently talked with his Alberta counterpart about using business risk management programs to support farmers impacted by tariffs.

What do the tariffs mean for canola processing facilities?

Saskatchewan is home to five canola crushing plants that help process canola seed into oil and meal.

Saskatchewan Premier Scott Moe has said the planned Chinese tariffs have the potential to do serious damage to the local economy.

“It’ll close crushing plants, I can’t be more clear,” he said.

Saskatchewan’s Minister of Trade and Export Development Warren Kaeding said the province is expecting to see another canola crushing facility begin operating in the near future and is worried the tariffs could have a negative impact.

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“I am concerned about them and the viability of them coming to the marketplace,” he said.

Are there alternative markets for canola?

The U.S. and China are the two biggest markets for Canadian canola. The Canola Council of Canada said there is room for the industry to grow in southeast Asia, specifically in the Philippines, Vietnam and Indonesia, where canola meal could potentially help support growing feed industries. But Chris Davison, chief executive with the Canola Council of Canada, said new markets are not a replacement for ones that are already established.

“When we talk about (market) diversification, we talk about it as something that’s a complement to rather than a replacement for,” he said.

How long could the tariffs on canola last?

There is much uncertainty in regards to U.S. tariffs. The administration has paused imposing 25 per cent tariffs on some goods covered under the Canada-United States-Mexico Agreement (CUSMA), and has lowered the tariff rate to 10 per cent on potash and some Canadian energy products, but has still imposed 25 per cent tariffs on steel and aluminum. Exemptions under CUSMA are set to expire on April 2.

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On that same day, the Trump administration has pledged to impose reciprocal tariffs on Canada, but there is uncertainty over how that will affect the canola industry.

China has imposed limits on Canadian canola before, only to remove them later. In 2019, China revoked the export licences for two Canadian canola sellers in retaliation for Canada’s arrest of Huawei Technologies Co. executive Meng Wanzhou, made at the request of the U.S. After the Chinese business executive was allowed to leave Canada, the two companies were given their licences back.

China is heavily reliant on Canadian canola. According to Morningstar DBRS analysts Moritz Steinbauer and Reid Usher, the country has limited options when it comes to replacing Canadian canola. In part, this is because China stopped canola imports from Australia, the second biggest canola exporter, over disputes about crop disease. This could explain why China has decided not to impose tariffs on canola seed at this time, the analysts said in a note.

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“Canola seed appears not to be part of the tariffs announced over the weekend, potentially because there are limited alternative sources to satisfy Chinese domestic demand,” they said.

With additional reporting from the Canadian Press

• Email: mhansen@postmedia.com

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