Uncertainty for Manitoba Farmers Following China's Tariff Announcement

A Manitoba farmer has expressed concerns over the uncertainty facing the agricultural sector due to China's recent announcement of a 100 per cent retaliatory tariff on canola oil and oil cakes. This move adds to the pressures already felt from potential tariffs on canola products imposed by the United States.

Chinese Tariffs Set to Begin March 20

China's Ministry of Commerce revealed that these tariffs, which will take effect on March 20, are a direct response to Canada imposing 100 per cent tariffs on Chinese electric vehicles, along with a 25 per cent levy on aluminum and steel products that started last October.

Bruce Dalgarno, a farmer from Newdale, Manitoba, located approximately 225 kilometres northwest of Winnipeg, noted that Canada sends around 2.5 million tonnes of oil cakes to China annually. These oil cakes are essential for livestock feed and for producing oil meal. A decrease in these shipments could pressure grain elevator companies to reduce canola prices, consequently affecting farmers' profits.

"There's a lot of farmers who will have to reevaluate their input costs since canola has the highest input costs of any crop we grow. If prices decline, it could render our crops uncompetitive," Dalgarno mentioned.

Current Export Figures and Market Dynamics

Dalgarno pointed out that Canada exports only about 600 tonnes of canola oil to China each year, hence the tariff may not significantly affect the overall Canadian economy. However, there are currently no tariffs on canola seeds, with Canada exporting between five million and six million tonnes of seeds to China annually.

China ranks as Canada’s second-largest trading partner after the U.S., which has already imposed tariffs on Canadian goods, including a 25 per cent tariff on canola products. For now, U.S. President Trump has paused some tariffs on Canadian goods, including canola products, until April 2.

In 2023, canola oil exports to the U.S. accounted for over $1.3 billion, making it one of the top five exports from Manitoba. Dalgarno noted that upcoming U.S. tariffs could have a more significant impact than the tariffs from China, especially if tariffs on canola seeds were to be introduced as well.

Impact on Farmers and the Agriculture Sector

Warren Ellis, president of the Manitoba Canola Growers Association, which has around 7,500 members in the province, highlighted that any additional costs resulting from tariffs will directly reduce the income farmers receive for their canola seed. He expressed hope that input prices will decrease, allowing farmers to maintain some level of profit margin.

According to Ellis, seeds, canola oil, and oil cakes collectively represent $5 billion worth of Canadian exports to China. Comparatively, exports to the U.S. reach around $8 billion. He reassured that while farmers are accustomed to facing challenges, there are limits, and some collateral damage is inevitable due to these tariffs.

The Manitoba Canola Growers Association plans to advocate for support from provincial and federal governments to help address the negative effects of the tariffs on the agriculture sector.

Prime Minister Justin Trudeau stated that Canada implemented these levies to counter what he described as China's state-directed policy of over-capacity. Following the U.S. and EU's lead, Canada has decided to impose these import levies on Chinese electric vehicles.

Government Actions and Economy Considerations

Recently, the federal government announced new relief measures designed to assist Canadian businesses and workers, including an allocation of $1 billion in financing through Farm Credit Canada to help minimize the financial impact on the agriculture and food sectors.

Dalgarno emphasized that the federal government must support the agriculture sector and canola growers, as they are facing significant challenges due to ongoing tariff disputes.

Chris Davison, president and CEO of the Canola Council of Canada, mentioned that these retaliatory tariffs from China are likely to have widespread and negative consequences for the industry. He estimates that the canola sector contributes more than $43 billion to the Canadian economy each year, and these tariffs could shut down or significantly restrict the canola market between Canada and China.

Davison advocates for predictable, tariff-free trade, viewing it as the best approach not just for Canadian canola, but for the overall agriculture and agri-food sectors. He urged the Canadian government to engage proactively and substantively with China to address and resolve this issue.

In addition to the canola tariffs, China is also expected to apply a 25 per cent duty on other Canadian agricultural products such as aquatic products and pork, further complicating the situation.

agriculture, tariffs, canola