Canola farmers are bracing for impact as China looks to impose hefty tariffs on their industry in response to Canadian tariffs on the country’s electric vehicle exports.
Just mere weeks away from when farmers plant their first seeds, China is to enact a 100 per cent levy on Canadian canola oil and meal, plus a 25 per cent duty on seafood and pork.
“All in all, it’s just bad news,” said Clinton Monchuck, a fourth-generation canola farmer from Lanigan, Sask.
The tariffs come in response to Canada’s 100 per cent levies on Chinese-made EVs and a 25 per cent tax on aluminum and steel products. Former prime minister Justin Trudeau said China had claimed an unfair advantage that was hurting Canada’s auto industry.
It’s unclear how consumers will be affected by the tariffs, but industry players say the sticker price of canola oil may not increase in Canada. The federal government has said China’s tariffs are unjustified, but it has not announced any concrete plans to help canola farmers.
“From the beginning, our focus has been and will continue to be the protection of Canadian workers and the unwavering support of our hard-working farmers,” read a Tuesday joint statement from three federal cabinet ministers, including Agriculture Minister Kody Blois.
Monchuck said the tariffs pose an existential threat to his family’s nearly 120-year-old canola farm. He expects to take a $100,000 hit this year, if the tariffs stay in place.
That’s without accounting for any other trade actions taken by the U.S., which intends to impose 25 per cent tariffs on all imports from Canada starting in April.
China’s actions are bound to resurface difficult memories of 2019 for canola farmers, who were hit with similar tariffs after Canadian authorities detained Meng Wanzhou, an executive of Chinese telecom mammoth Huawei, on a warrant from the U.S.
“We’ve gone through this before,” Monchuck said.
Farmers point the finger at the federal government because the tariffs are a direct response to measures to protect the Canadian auto sector, he said.
“It’s pretty tough as a farmer, when a government is kind of picking winners and losers,” he said.
“We happen to be on the losing end of this discussion.”
In response to the tariffs, leaders from the Prairie provinces have requested action from Ottawa to support farmers. Alberta, Saskatchewan and Manitoba rely heavily on China for canola exports, sending billions of dollars in products overseas each year.
An association representing canola growers in Alberta has also asked the federal government to cover losses resulting from the tariffs. The impact of tariffs from China alone “could be potentially devastating,” said Karla Bergstrom, executive director of Alberta Canola.
The current situation has left many farmers without bids from sellers, Bergstrom said. Canola prices have also plummeted since China announced the tariffs.
“It’s prohibitive,” Bergstrom said. “It will be uncompetitive to sell to China.”
Alberta Agriculture Minister RJ Sigurdson said he hopes the federal government can reboot talks with China to resolve the trade war. He would not say whether he thought the tariffs on China were a mistake.
The governing United Conservative Party set aside $4 billion this year to manage its response to tariffs, up $2 billion from the year before.
Speaking to rural leaders, Premier Danielle Smith said Wednesday the province could avoid the worst pain because canola seed, the largest of the province’s canola-based exports, is exempted from China’s tariffs.
“There are going to be some products impacted, but the bulk of what we export is not,” she said.
Saskatchewan, with a slim $12-million surplus in its budget tabled Wednesday, did not set aside money to help manage the potential impact of tariffs. Manitoba will deliver its provincial budget Thursday.
