Canada's $920 million of exports to China are at risk
By Aleah Harle, Farms.com Risk Management Intern
On March 8, 2025, China announced steep retaliatory tariffs on $2.6 billion worth of Canadian agricultural products in response to Canada’s October tariffs of 100% on Chinese EVs, and 25% on steel, and aluminum.
These newly announced Chinese tariffs include a 100% levy on $1 billion of Canadian rapeseed oil, oil cakes, meal, and pea imports, along with a 25% tax on $1.6 billion worth of Canadian aquatic products and pork.
Set to take effect on March 20, the tariffs have already been seen playing a devastating impact on markets and Canadian farmers.
China – a key market for Canadian canola – represents close to $5 billion in export data. As Canada’s second-largest crop by acreage, canola generated $13.6 billion in 2023, with canola meal and oil exports to China alone valued at $920.9 million and $21 million in 2024, respectively.
However, with China’s newly imposed tariffs, these figures-and the broader canola market – face uncertainty. With China expected to experience a rapeseed meal supply shortage by the third quarter of this year, the key question for Canada is: How will this affect Canadian farmers and global trade?
These tariffs are expected to drive down the prices farmers receive for their crops, putting significant strain on the industry. In fact, canola prices are down $2.75/bu since its February high and since the Chinese tariff announcement, prices are down $1.38/bu, trading at new lows as the funds were too long and wrong!
Lower prices will directly impact farmers’ ability to invest in next year’s crop, while also increasing market pressure. Additionally, reduced shipments to China will force grain elevator companies to cut canola prices and seek alternative markets, further squeezing farmers’ profitability.
As China remains a key buyer of Canadian canola products, the ripple effect of these tariffs could be far-reaching, adding to the growing unpredictability in the sector.
The ongoing tariff disputes with the United States are expected to have a greater impact than those imposed by China. However, if China were to include canola seed in its list of taxed agricultural products, the consequences could be even more severe.
“While the agricultural sector is no stranger to uncertainty, these unprecedented tariff moves are pushing farmers beyond their limits,” says Moe Agostino, Farms.com Risk Management Chief Commodity Strategist.
Since no single market can fully replace China or the U.S. in the near term, there is a growing urge to find new uses for canola. One promising route is the biofuel industry, where expanding Canadian-made and manufactured biofuels could strengthen the domestic market.
This shift would ultimately open the opportunity to create new demand for canola within Canadian borders, reducing the reliance on foreign markets and minimizing exposure to trade barriers.
With the current push to decarbonize transportation, biofuel demand is expected to grow, making this an opportunity for the industry and to reduce the harm experienced by farmers. In 2024, Canada exported a record 3.3 million tonnes of canola oil to the U.S., a significant portion of which was used as a feedstock for biofuels up from 2.9 in 2023.
But the Trump administration is yet to provide clarity on 45Z for biofuels. Also, U.S. tariffs could rise to 50% on April 2nd and Canola oil could be on the tariff list.
Industry leaders are calling on the Canadian government to engage in swift negotiations with China to resolve the dispute and minimize the impact on farmers.
There are also calls for financial compensation to help offset anticipated losses. The tariffs are already hurting Canadian grain farmers, with lower prices and financial strain.
With limited alternative markets and growing uncertainty, immediate support is necessary. Long-term solutions, like boosting domestic industries, may offer a path to stability amid these challenges.
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