Retaliatory tariffs imposed by China on Canadian canola causes uncertainty for Manitoba farmers
100 per cent tariffs will take effect March 20 in response to Ottawa's tariffs on Chinese electric vehicles
A Manitoba farmer says the 100 per cent retaliatory tariffs China is putting on canola oil and oil cakes are causing additional uncertainty in an agriculture industry dealing with the potential impact of U.S. tariffs on canola products.
China's Commerce Ministry announced Saturday the tariffs will go into effect on March 20 in retaliation for Canada's 100 per cent tariffs on Chinese-made electric vehicles and a 25 per cent levy on Chinese aluminum and steel products imposed on Oct. 1.
Bruce Dalgarno, who farms canola and other crops near Newdale, Man., about 225 kilometres northwest of Winnipeg, said Canada exports approximately 2.5 million tonnes of oil cakes to China each year, which is used to feed livestock or be ground into oil meal.
A reduction in the shipments will apply pressure on grain elevator companies to lower the price of canola and export it to other countries, which will impact profitability for farmers, Dalgarno said.
"I think there's lots of farmers [who] are going to be looking at their … input costs, because input costs on canola are the highest of any crop we've got, so as the price comes down, it becomes uncompetitive," he said.
Canada only ships about 600 tonnes of canola oil to China per year, so that tariff likely won't have a huge impact on the Canadian economy, Dalgarno said.
Currently there are no tariffs on canola seed from Canada, which exports between five million and six million tonnes to China per year, he said.
China is Canada's second-largest trading partner, following the U.S., which has imposed 25 per cent tariffs on Canada, Mexico and China, although U.S. President Trump paused some tariffs imposed on Canadian goods, including canola products, until April 2.
Canola oil exports to the U.S. alone made up at least $1.3 billion of Manitoba's economy in 2023, and was one of the top five exports that year, according to a Manitoba Bureau of Statistics summary.
"The tariffs in the States, I think, are going to have a larger impact than any tariffs coming from China now, and that's hoping that they don't change it to something else. Like if they also included the seed going into China, well, that would be even more damaging," Dalgarno said.
Warren Ellis, president of the Manitoba Canola Growers Association, which has about 7,500 members in the province, said any extra costs will directly affect the money in farmers' pockets and how much they can sell their canola seed for.
"Their only option is to try to cut costs ... so we just hope like heck that the inputs that we're going to be using come down in price slightly, so that it will allow us to have some sort of margin," Ellis said.
Seed, canola oil and oil cakes account for $5 billion worth of Canadian exports to China, while exports to the U.S. total $8 billion, he said.
Ellis said farmers are used to dealing with adversity in the industry, "but there are limits and there will be some collateral damage."
The association will lobby the provincial and federal governments to address the effects on Manitoba's agriculture sector of the tariffs on Chinese-made electric vehicles, he said.
Prime Minister Justin Trudeau said in August that Ottawa was imposing the levies to counter what he called China's intentional state-directed policy of over-capacity. Canada followed the lead of the United States and the European Union, both of which have also applied import levies to Chinese-made electric vehicles.
On Friday, the federal government announced some tariff relief measures for Canadian businesses and workers, including $1 billion in new financing through Farm Credit Canada to reduce financial barriers for the Canadian agriculture and food industry.
"The federal government should certainly be there to backstop the Canadian agriculture sector and the canola growers, because we're the ones taking the hit," Dalgarno said.
"It's all causing a lot of uncertainty in the industry."
Chris Davison, president and CEO of the Canola Council of Canada, said retaliatory tariffs from China are expected to have a "widespread and negative impact" across the industry.
The total economic impact on the Canadian economy from the canola sector is more than $43 billion annually, he said.
Davison expects the tariffs will restrict or close the canola market between Canada and China.
"We advocate and are strong supporters of having, you know, predictable tariff-free trade. We think that's the best path forward, not just for Canadian canola, but for Canadian agriculture and agri-food," he said.
"We are going to need the Canadian government to engage very systematically and substantively with our trade partner China in this instance, in order to resolve this issue."
China will also apply a 25 per cent duty on Canadian aquatic products and pork, the Chinese ministry said in a statement.
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With files from Zubina Ahmed