China has announced new tariffs on over $2.6 billion worth of Canadian agricultural and food products in retaliation for levies imposed by Canada last year. The fresh tariffs, set to take effect on March 20, reflect Canada’s duties on Chinese-made electric vehicles, steel, and aluminum, further intensifying global trade tensions.
Details of the New Tariffs
China’s Ministry of Commerce stated that the new tariffs include:
- A 100% tariff on over $1 billion worth of Canadian rapeseed oil, oil cakes, and pea imports.
- A 25% tariff on $1.6 billion worth of aquatic products and pork.
However, Beijing has notably excluded canola, one of Canada’s most valuable exports, potentially leaving room for future negotiations.
China Accuses Canada of Protectionism
China has accused Canada of violating World Trade Organization (WTO) rules and engaging in protectionist policies. Canadian Prime Minister Justin Trudeau defended the initial tariffs imposed in October, stating they were necessary to counter China’s state-driven overproduction, a concern also raised by the United States and European Union.
In response to Canada’s trade measures, China launched an anti-dumping investigation into Canadian canola imports last year, indicating that tensions have been brewing for months.
Strategic and Economic Implications
Trade experts believe China’s response serves multiple strategic purposes:
- Political Pressure on Canada: With Canada’s elections scheduled for October, analysts suggest that Beijing may be hoping for a policy shift under a new government.
- Similar to Past Australia Tensions: Comparisons are being drawn to China’s previous trade disputes with Australia, where Beijing used economic pressure to influence diplomatic relations.
- U.S. Trade War Considerations: As the United States considers adjusting tariffs on Canada and Mexico while maintaining its trade war with China, Beijing’s move could be a calculated response to broader global trade shifts.
What’s Next?
While the tariffs are set to take effect on March 20, both nations may still engage in diplomatic discussions to prevent further escalation. Given the high economic stakes, Canada may seek to resolve the issue through WTO channels or backdoor negotiations.
With global trade tensions rising and countries reassessing economic alliances, the outcome of this dispute could have long-term implications for Canada-China relations and the broader international trade landscape.
