Facing a trade storm? The Canadian canola industry is bracing itself for potentially disappointing news, despite Prime Minister Mark Carney's visit to China. Government officials are tempering expectations, signaling that a complete removal of tariffs is unlikely, and the industry should prepare for the possibility of reduced rates at best.
Federal officials have been quietly advising grain traders on what tariff rates might be considered acceptable for canola products currently facing restrictions from Beijing. They've also cautioned against anticipating a return to zero tariffs across the board, according to sources familiar with the situation.
This all comes as Prime Minister Carney is in China this week, aiming to mend strained relations and boost trade ties. The visit sparked optimism, especially after the costly canola trade dispute that started with tariffs on meal and oil in March 2025, and escalated to levies on canola seed in August.
But here's where it gets controversial... The core issue is the ongoing trade dispute, with China's canola tariffs being directly linked to Ottawa's 100% tariffs on Chinese-made electric vehicles (EVs). Beijing has made it clear: no easing of agricultural restrictions until Canada drops the EV levies.
One government official suggested a breakthrough affecting canola shipments is possible, but that Ottawa won't agree to cut EV tariffs unless the deal significantly benefits Canada.
Reduced tariffs, while better than the current situation, might not be enough to make Canadian canola competitive in the Chinese market. For instance, even if Ottawa lowers EV tariffs to 50% and China reciprocates with a 50% reduction on agricultural tariffs, Canadian canola could still struggle against European and Australian competitors.
And this is the part most people miss... Determining competitive tariff rates is a complex guessing game. Only Chinese buyers know the true landed price of Canadian canola compared to its substitutes, and they are the ones bearing the cost of the tariffs. As Tony Tryhuk, a commodities futures trader at RBC Dominion Securities, puts it, "We can guess what tariff level would make it work, but we’d be guessing at best."
What do you think? Do you believe that a resolution is possible? Share your thoughts in the comments below!
