China Tariffs Add to Canada’s Trade Troubles

March has come in like a lion for Canada, with its two biggest trading partners threatening wide-ranging (and ever-changing) tariffs, plunging the export-dependent economy into uncertainty right as a new prime minister takes the reins and a spring election beckons.

Last Friday, Beijing announced plans for 100 per cent tariffs on Canadian canola oil, meal, and peas and a 25 per cent tariff on seafood and pork products. The levies — targeting exports worth an estimated C$3 billion, or about 10 per cent of total Canadian merchandise exports to China — are set to come into effect on March 20.

Beijing’s move is linked to an “anti-discrimination investigation” launched in September 2024. That probe was in response to Ottawa's decision to impose 100 per cent tariffs on Chinese electric vehicles and 25 per cent tariffs on Chinese aluminum and steel, rates matching U.S. tariffs on those same products.

A statement on Saturday from three Canadian cabinet ministers, including trade minister Mary Ng, noted that “Canada does not accept the premise of China’s investigation, nor its findings.” The ministers were “deeply disappointed,” but emphasized that “Canada remains open to engaging in constructive dialogue” with Beijing.

Canadian canola seed exports to China, worth around C$4 billion annually, were exempted from the tariffs, leaving room for Beijing to negotiate (or escalate). Saskatchewan’s premier, Scott Moe, asked Ottawa to resolve the dispute with China “as soon as possible,” while British Columbia Premier David Eby said that “we don’t want to get crushed between the two biggest economies in the world.”
 

Between a rock and a hard place

China’s levies may have been timed strategically, designed to spook a Canadian economy already unnerved by U.S. President Donald Trump’s ‘on-again, off-again' tariffs.

China’s tariffs may also be a warning shot. Canadian Foreign Affairs Minister Mélanie Joly said recently that Ottawa would be open to discussing a U.S. request that would see Canada (and Mexico) match the U.S.’s 20 per cent tariffs on China. Joly said both she and Canadian finance minister Dominic LeBlanc would discuss this ‘Fortress North America’ approach with their American counterparts.

Trump’s “whipsaw” trade policy has unnerved investors, with the S&P 500 index sliding 8.2 per cent since Inauguration Day. The Wall Street Journal editorial board wrote this week that if Trump “wants to quiet recession alarm, he would be wise to put his tariff plans on the shelf.”
 

Enter Carney

Canadian Prime Minister-designate Mark Carney said Tuesday that Trump’s tariffs were “an attack on Canadian workers, families, and businesses.”

Joly is hosting Trump’s secretary of state, Marco Rubio, alongside other G7 foreign ministers in Charlevoix, Que., this week, in what promises to be an at-times tense meeting. Rubio played down tensions with Canada on Monday.

The same day, a Japanese government spokesperson called Canada “an important strategic partner in the Indo-Pacific,” and congratulated Carney on becoming Liberal leader. Tokyo vowed to “ensure the G7 is united.”