China retaliated against Canada on Saturday by imposing tariffs on more than $2.6 billion in Canadian agricultural and food items, establishing a new front in a trade war fuelled in large part by tariff threats issued by US President Donald Trump.
The taxes, published by the commerce ministry and set to go into effect on March 20, are equivalent to the 100% and 25% import duties imposed by Canada on Chinese-made electric vehicles, steel, and aluminium items just over four months ago.
By excluding canola, which is also known as rapeseed, and was one of Canada’s top exports to the world’s No.1 agricultural importer prior to China investigating it for anti-dumping last year, Beijing may be keeping the door open for trade talks.
However, analysts say the duties act as a warning shot, with the Trump administration indicating that it may lessen the 25% import taxes it is threatening Canada and Mexico with if they apply the same additional 20% charge he has imposed on Chinese goods over fentanyl shipments.
China will apply a 100% tariff to just over $1 billion of Canadian rapeseed oil, oil cakes and pea imports, and a 25% duty on $1.6 billion worth of Canadian aquatic products and pork.
“The timing may serve as a warning shot,” said Dan Wang, China director at Eurasia Group in Singapore. “By striking now, China reminds Canada of the cost of aligning too closely with American trade policy.”
“China’s delayed response (to Ottawa’s October tariffs) likely reflects both capacity constraints and strategic signalling,” she added. “The commerce ministry is stretched thin, juggling trade disputes with the U.S. and European Union.”
“Canada, a lower priority, had to wait its turn.”
The Canadian embassy in Beijing did not immediately respond to a Reuters request for comment.
Canadian 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, following the lead of the United States and European Union, both of which have also applied import levies to Chinese-made EVs.
In response, China in September launched an anti-dumping investigation into Canadian canola imports. More than half of Canada’s canola exports go to China and the trade was worth $3.7 billion in 2023, according to the Canola Council of Canada.
“The investigation on Canadian canola is still ongoing. That canola was not included in the list of tariffs this time might also be a gesture to leave room for negotiations,” said Rosa Wang, an analyst with agricultural consultancy JCI.
Beijing could also be hoping that a change in government in Ottawa makes it more amenable. Canada’s next national election must be held by October 20.
