Canada-China Canola Deal Limited by Steel Tariffs, Says Minister

Negotiations between Canada and China regarding canola tariffs were hampered by ongoing anti-dumping duties on Chinese steel, according to Canada’s Agriculture and Agri-Food Minister, Heath MacDonald. During Prime Minister Mark Carney‘s recent trip to China, a five-year agreement was reached that allows China access to the Canadian electric vehicle market. However, Canada could only secure a temporary lifting of tariffs on canola and seafood products for a duration of ten months, beginning in March 2024.

When questioned about the limited scope of the deal, MacDonald pointed to the challenges posed by the current steel tariffs. He stated, “We’ve got some work to do on that,” highlighting the detrimental impact of U.S. President Donald Trump‘s 50 percent tariffs on Canadian steel and aluminum, particularly affecting the industries in Ontario and Quebec.

In a news conference in Ottawa, MacDonald announced consultations into federal agricultural policy while addressing the complexities of the negotiations. He later appeared on CTV’s Power Play with Vassy Kapelos, where he was pressed on whether the extension of tariff relief for canola, lobster, crabs, and peas would be linked to the removal of the steel levies. MacDonald did not rule out such a connection but deferred to Industry Minister Melanie Joly for further clarification.

During his meeting with Chinese President Xi Jinping, Carney announced what he termed a “landmark” deal that would reduce tariffs on canola seed from approximately 84 percent to a combined rate of around 15 percent. The Canadian government also anticipates that anti-discrimination tariffs on Canadian canola meal, lobster, peas, and crabs will be lifted by March 1, 2024.

While this agreement provides temporary relief, MacDonald indicated that long-term solutions for the canola industry depend on the federal government’s willingness to address the 25 percent surtax on additional Chinese steel and aluminum products. The trade deal signed by Carney and Xi allows for remissions on “certain Chinese steel and aluminum products that are in short supply in Canada” until the end of 2026. This deal encompasses 66 product categories, while the previous government under Justin Trudeau had imposed tariffs on 182 categories to prevent dumping practices.

MacDonald described a sense of urgency during the negotiations, stating that the Canadian delegation felt pressure to act swiftly in securing a deal. “It was clear to us and our negotiators that we need to act, and act now,” he remarked. He emphasized the critical role Carney played in building a relationship with Xi to facilitate the negotiations.

The Canadian government has set a target to increase exports to China by 50 percent by 2030. Although a more extensive deal on agricultural products was not finalized during Carney’s visit, MacDonald shared some positive news regarding Canadian beef exports. Following a ban imposed in 2021 due to a case of bovine spongiform encephalopathy (BSE) in Alberta, Canadian beef will once again be available in the Chinese market.

As Canada navigates its complex trade relationship with China, the future of its agricultural exports, particularly canola, remains closely tied to broader discussions surrounding steel tariffs and trade policies.