{"id":10382,"date":"2025-03-27T17:52:31","date_gmt":"2025-03-27T17:52:31","guid":{"rendered":"https:\/\/www.rbc.com\/en\/?post_type=rbc_tl&p=10382\/"},"modified":"2025-05-09T06:13:48","modified_gmt":"2025-05-09T06:13:48","slug":"food-fight-chinas-tariffs-adds-to-exporters-woes","status":"publish","type":"rbc_tl","link":"https:\/\/www.rbc.com\/en\/thought-leadership\/the-trade-hub\/food-fight-chinas-tariffs-adds-to-exporters-woes\/","title":{"rendered":"Food Fight:\u00a0China\u2019s tariffs adds to exporters\u2019 woes"},"content":{"rendered":"\n
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China retaliated with tariffs of its own on various Canadian agricultural exports in response to Ottawa\u2019s tariffs last fall on Chinese electric vehicles and metals.<\/p>\n\n\n\n

The new tariffs mark an escalation in trade tensions between Canada and China, with the risk tilted to the upside. It comes as the agriculture sector is already experiencing challenges posed by the trade uncertainty with the United States.<\/p>\n\n\n\n

Another hit to Canadian exporters<\/h2>\n\n\n\n

China imposed 100% tariff on Canadian exports of canola oil, canola oil-cake, and pea imports, and 25% duties on pork and aquatic products, which is expected to hit some industries and provinces hard.<\/p>\n\n\n\n

The tariffs are expected to affect approximately $2.9 billion of domestic exports (in 2024), with seafood products making up the largest share at nearly $1.2 billion, followed by canola oil and cake at $938 million, and pork products ($467 million). China is also Canada\u2019s second-largest export market for listed pea products ($306 million).<\/p>\n\n\n\n

While the tariffs are expected to target only a small share of total Canadian domestic merchandise exports\u2014roughly 0.4% in 2024\u2014they are likely to pose challenges for some Canadian agricultural exporters.<\/p>\n\n\n\n

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Although China remains an important Canadian market for these products, its share of total exports has declined in recent years. In 2019, China accounted for roughly $3.8 billion (25%) of the export value of these goods, which has since declined to $2.9 billion, or 14%, in 2024. Over the same period, Canadian exporters have shifted to the U.S., with exports for these goods rising from $7.2 billion (47%) in 2019 to $12.3 billion (60%) in 2024. But that pivot to the U.S. could prove to be costly if Washington rolls out tariffs on Canadian exports as part of its April 2 trade \u201cliberation day,\u201d or later this year.<\/p>\n\n\n\n

Atlantic provinces in the eye of the storm<\/h3>\n\n\n\n

Among provinces, Nova Scotia is most exposed to these tariffs. The affected goods account for approximately 9.2% of the province\u2019s total domestic exports. Notably, China is Nova Scotia\u2019s second-largest export market for lobsters, which amounted to nearly $452 million in export value in 2024.<\/p>\n\n\n\n

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Newfoundland & Labrador shrimp exporters ($105 million) and Saskatchewan\u2019s exporters of canola oil and cake ($515 million) are among the most exposed within their respective provinces. The listed tariffed goods account for approximately 1.7% and 1.5% of their total domestic exports, respectively.<\/p>\n\n\n\n

China whips out an old playbook<\/h3>\n\n\n\n

China\u2019s newly imposed duties on Canadian agricultural exports are not unprecedented. In 2019, China\u2019s import restrictions on some Canadian canola exporters, led to a sharp decline in imports of Canadian canola seeds to the world\u2019s second largest economy.<\/p>\n\n\n\n

The restrictions are estimated to have contributed to significant losses for Canadian exporters, on reduced export volumes and the prices received for their products. The Canola Council of Canada estimated that between March 2019 and August 2020, China\u2019s actions cost the domestic industry between $1.54 billion and $2.35 billion<\/a> in lost sales and lower prices.<\/p>\n\n\n\n

If the tariffs persist for some time, canola farmers fear job losses, declines in production volumes, and capital cuts beyond the projects that are already under way, according to an industry executive.<\/p>\n\n\n\n

While the new tariffs could trigger losses for the targeted industries, the more significant risk stems from the potential escalation of the trade conflict. The latest measures, introduced on March 20th<\/sup>, followed China\u2019s anti-discrimination investigation into Canada\u2019s tariffs on Chinese EVs and metals. Meanwhile, China\u2019s ongoing anti-dumping investigation into Canadian canola (including seeds) and chemical products raises the possibility of additional trade barriers. Given that China remains Canada\u2019s largest export market for canola seeds \u2013 valued at approximately $4 billion in 2024 \u2013 any further restrictions could have significant economic repercussions on the industry.<\/p>\n\n\n\n

Salim Zanzana<\/strong> is an economist with RBC Economics.<\/em><\/p>\n\n\n\n