China implemented a new preliminary anti-dumping duty on Canadian canola imports, escalating an ongoing trade dispute that originated when Ottawa imposed tariffs on Chinese electric vehicle imports last August. The provisional duty rate of 75.8 percent will take effect on Thursday. China, the world’s largest importer of canola, primarily sources its canola from Canada, also known as rapeseed.
The Ministry of Commerce in China stated that an anti-dumping investigation initiated in September 2024 revealed that Canada’s agricultural sector, particularly the canola industry, received significant government subsidies and preferential policies. This move is significant, as it signals a major disruption in the trade relationship between the two countries.
In response to the duty, China’s most active Zhengzhou rapeseed meal futures experienced a three percent decline, the largest daily drop since June 26. The investigation is slated to conclude in September, with a possibility of extending the deadline by six months for a final decision on the duties.
The recent policy shift marks a departure from the conciliatory tone previously adopted in June. The imposition of the duty puts pressure on Canada to address trade frictions with China. While this move poses challenges for Canada, it presents an opportunity for Australia to increase its presence in the Chinese canola market.
Analysts suggest that finding alternatives to Canadian canola on short notice will be difficult, given China’s heavy reliance on imported canola for animal feed in its aquaculture sector. Australia, the second-largest canola exporter, is poised to benefit from this situation, potentially regaining access to the Chinese market after years of restrictions due to fungal plant disease concerns.
In a related development, China initiated an anti-dumping investigation into pea starch imported from Canada, which could last up to a year. This investigation comes as Russia surpassed Canada as the top exporter of peas to China. Both Canada and the U.S. have accused China of dumping and subsidizing pea protein exports to North America.
On a different front, China and the U.S. have paused tariff hikes and expressed intentions to negotiate a new trade deal. This pause averts significant tariff increases that could have led to a trade embargo between the two countries. Currently, a 30 percent tariff on Chinese imports and a 10 percent tariff on U.S. imports remain in effect as negotiations continue.
