(Bloomberg) — China’s weekend move to impose tariffs on Canadian rapeseed products has sent prices for the crop plunging, adding more uncertainty to global food flows that are being buffeted by a series of trade wars.
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The move is a response to Canadian tariffs on Chinese-made electric vehicles, steel and aluminum imposed last year and comes as both countries are grappling with sweeping levies from US President Donald Trump’s administration. It also leaves Mark Carney juggling trade wars on two major fronts as he prepares to take over as Canada’s prime minister.
China announced a 100% tariff on rapeseed oil and meal from Canada, where the crop is known as canola, along with a smaller duty on pork and seafood imports. China is the North American nation’s biggest export destination for the oilseed, and the measures come just before farmers start sowing for the upcoming season. Futures in New York tumbled by the exchange limit on Monday.
“Canadian canola farmers are facing an unprecedented situation of trade uncertainty from our two largest export markets only weeks before planting begins,” Rick White, the president and chief executive officer of the Canadian Canola Growers Association, said in a statement.
The Chinese measures come into effect on March 20.
While China’s move is sweeping, canola itself, which China imports in larger volumes than its oil and meal, was left untouched. The Asian nation has an ongoing anti-dumping probe into Canadian rapeseed imports, leaving open the possibility of further measures.
“The lack of tariffs on Canadian canola seed shows a hesitancy by China to further constrain its oilseed sourcing options,” analyst Dennis Voznesenski at Commonwealth Bank of Australia wrote in a note. China this month targeted a raft of American farm products including grains and meat in response to levies from Trump. Those take effect Monday.
China’s inbound shipments of rapeseed reached 6.39 million tons last year, almost all of which came from Canada. The Asian nation also imported about 2.74 million tons of meal, with the North American country the top supplier, according to Chinese customs data.
The most-active canola contract slid C$40 ($28) per ton on Monday, more than 6%, to reach the lowest in about two months. However, prices in China rallied on concerns over tight supply.
