China announced on Saturday that it will impose retaliatory tariffs on select Canadian goods, escalating the ongoing global trade war.
China Hits Back at Canada’s Tariffs
Beijing confirmed that starting March 20, it will impose:
- 100% tariffs on rapeseed oil, oil cakes, and peas
- 25% tariffs on aquatic products and pork from Canada
This move follows Canada’s decision in October to impose a 100% import levy on Chinese electric vehicles and a 25% tariff on steel and aluminum.
In response, the Chinese government stated, “Canada’s measures seriously violate the rules of the World Trade Organization, are typical acts of protectionism, constitute restrictive measures against China, and seriously damage China’s legitimate rights and interests.”
Impact on Canada’s Agricultural Exports
Rapeseed (Canola) is Canada’s second-largest acreage crop, generating C$13.6 billion (€8.73 billion) in sales in 2023. Canadian exports to China in 2024 included:
- C$920.9 million (€591.3 million) worth of canola meal and canola oil
- C$21 million (€13.5 million) in canola oil exports
- C$303 million (€194.5 million) in pea exports
U.S. Tariffs and Canada’s Response
China’s move comes after U.S. President Donald Trump imposed new tariffs last week, including:
- 25% tariffs on Canada and Mexico
- Doubling Chinese import levies to 20%
Shortly after, Trump granted a one-month exemption on auto and agricultural tariffs for Canada and Mexico under USMCA rules, as both countries expressed openness to adjusting tariffs on Chinese imports.
Meanwhile, Canada’s Global Affairs department condemned China’s announcement, calling it “unjustified”.
“Canada does not accept the premise of China’s investigation, nor its findings,” it said in a statement.
The statement also highlighted concerns over China’s economic policies, noting:
“Canada remains open to engaging in constructive dialogue with Chinese officials to address our respective trade concerns.”
China’s Economy Faces Inflation Challenges
Amid trade tensions, China is also grappling with economic difficulties, with consumer prices falling 0.7% year-on-year in February—the first negative inflation rate in 13 months.
At its annual government meeting, Beijing set its GDP growth target at 5% for 2025 and announced new stimulus measures to support the economy. However, weak consumer demand and global trade conflicts make this target difficult to achieve.
China has also pledged a “proactive fiscal policy and a more moderately loose monetary policy”, lowering its inflation target to 2%—its lowest in over two decades—while increasing its deficit level to a three-decade high of 4% GDP.
Chinese Stock Markets and Yuan Decline
On Monday, the Chinese Yuan and stock markets fell due to:
- Rising trade tensions
- Disappointing inflation data
The Chinese Yuan dropped 0.22% against the U.S. dollar, while the Hang Seng Index slipped 1.7% in early morning trading.
Despite this, China’s markets have been rallying since January, partly due to the launch of DeepSeek’s AI model, a Chinese startup competing with leading U.S. AI models.
As tensions rise, global markets remain on edge, watching how China, Canada, and the U.S. navigate the escalating trade conflict.
