China Slaps 75% Duty on Canadian Canola
China Imposes 75.8% Duty on Canadian Canola, Escalating Trade Tensions
The Chinese government announced a provisional 75.8% duty on Canadian canola, effective Thursday, in a move that has shocked Canada’s agriculture sector.
Canada strongly disputed the decision, saying it does not dump canola and expressing “deep disappointment” over the ruling, while remaining open to dialogue. “Canada is committed to ensuring fair market access for our canola industry, and we remain ready to engage in constructive dialogue with Chinese officials to address our respective trade concerns,” said International Trade Minister Maninder Sidhu and Agriculture Minister Heath MacDonald.
The move further strains Canada’s trade relations with the world’s two largest economies, as Canadian exports are also facing U.S. tariffs. While the U.S. is Canada’s main market for canola oil and meal, China imports most of Canada’s canola seed.
“This duty essentially closes the Chinese market to Canadian canola,” said Chris Davison, president of the Canola Council of Canada. Canada exported nearly C$5 billion ($3.64 billion) of canola to China in 2024. Trader Tony Tryhuk of RBC Dominion Securities described the news as “a real surprise and a shock.”
China, the world’s largest canola importer, relies almost entirely on Canada for its supply. Analysts say the steep duties could halt imports almost entirely if enforced. “Who will pay a 75% deposit to bring Canadian canola to China? It’s like telling Canada, ‘We don’t need your canola, thank you very much,’” said a Singapore-based oilseed trader.
The tariffs follow China’s earlier duties on canola oil and meal in March. Canada, in turn, has imposed tariffs on Chinese steel and aluminum. China’s Ministry of Commerce said an anti-dumping probe, launched in September 2024, found that Canada’s agricultural sector benefited from government subsidies and preferential policies.
Canadian officials and the canola industry have repeatedly denied any dumping, suggesting China’s complaints may be influenced by broader trade and political tensions. Following China’s announcement, ICE November canola futures dropped by about $30 to $650.30 per metric ton. A final ruling could still change the rate or overturn the decision.
This development marks a stark contrast to the more conciliatory tone in June, when China’s Premier Li Qiang told Canadian Prime Minister Mark Carney there were no deep-seated trade conflicts. “This move … will put additional pressure on Canada’s government to sort through trade frictions with China,” said Even Rogers Pay, an analyst at Trivium China.
China has also launched investigations into Canadian pea starch and imposed provisional duties on halogenated butyl rubber.
No Easy Replacement for Canadian Canola
Analysts say it will be difficult for China to quickly replace millions of tons of Canadian canola, which is used for animal feed in aquaculture and for cooking oil. Australia may gain an opportunity to export more canola to China after years-long trade restrictions, but fully replacing the Canadian supply would be challenging unless demand drops sharply, said Donatas Jankauskas, analyst at CM Navigator.
Davison added that China will still need Canadian canola to meet demand for both quality and volume. Canadian farmers, preparing to harvest, are bracing for price declines. Rick White, president of the Canadian Canola Growers Association, warned that the duty will likely depress prices for farmers.
“Already, there’s downward pressure on prices due to a larger-than-expected Canadian crop thanks to good weather,” said David Derwin, broker at Ventum Financial. He added uncertainty remains over China’s intentions: “Is this a negotiating tactic, or is this the final word?”
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