China announced a temporary 75.8% tariff on Canadian canola sold as a commodity (that is bulk canola seed) to start on August 14, as a result of the anti-dumping investigation regarding canola imported in 2023 which it announced nearly a year ago under WTO (World Trade Organization) rules. Dumping is when a company sells to an export market for less than it charges domestic customers and these low prices harm the importing country’s own industry by creating unfair competition. China’s new tariff is preliminary and could change in September when it completes its investigation of 2023 import prices’ impact on the Chinese canola sector.
WTO rules say anti-dumping duties cannot be higher than the actual damage done to the importing country’s industry – the duty is meant to level the playing field between the imports and the domestic product. Companies are not the target of WTO rules – the rules allow governments to apply measures such as duties as a way to influence how companies do business. It is unlikely that companies discounted Canadian canola sold to China in 2023 to the extent a 75.8% tariff would be justified, thus Canada could dispute the finding at the WTO. The WTO’s dispute settlement process takes a year or more, so would not provide a quick solution.
As of August, nearly all of last year’s canola crop has been sold and there’s very little left in storage. This year’s crop is still in the field, and while harvesting begins soon, canola exports really don’t start moving until October. Canadian Grain Commission 2024 statistics show that only 1.7 million tonnes of canola had been exported by the end of September, so farmers should not panic – late summer is a period when canola is not normally shipped to China. There is a window for negotiators to work on resolving this issue before the potential impacts of a tariff would take effect.
When there was a lot of media attention to China’s 100% tariff on canola oil and meal in March 2025, it appeared that the big grain companies took advantage of a panic by paying farmers less for canola than they should have because the oil and meal tariffs only affected a very small portion of Canada’s canola production. Shipments of bulk canola to China actually ramped up in April 2025.
Chinese canola imports in context
Only one-third of Canada’s canola crop is exported. China is Canada’s biggest canola export customer, but Canada’s domestic market for canola is twice the size of our export market. Two-thirds of the canola produced by Canadian farmers is used in Canada. Canola crushers make canola oil for cooking and biodiesel fuel and canola meal for livestock feed. In addition to China, significant amounts of Canadian canola are imported by Japan, Mexico and the EU.
China produces canola, but not enough to meet its needs. Canada is the source of nearly all of China’s imported canola. Some commenters suggest Australia might take advantage of the anti-dumping duty and capture Canada’s market. However, China stopped buying Australian canola due to a fungal disease found there which they don’t want contaminating Chinese canola fields. China recently considered allowing a few test shipments from Australia, but has not gotten results yet. Australia’s total canola production is a third of Canada’s output, and not much more than what Canada’ exports. About half of Australia’s canola production is verified non-GMO; they are likely to continue selling into the premium European market even if China proves willing to accept their canola.
China does produce some of its own canola, and it may be willing to substitute imported soybeans, perhaps from Brazil, for some of its oilseed needs.
Canada may be able to continue diversifying canola exports away from China – Mexico, Japan and EU are growing markets, and we are also seeing expansion of canola crushing capacity in Canada, which will take some pressure off if China’s anti-dumping duty continues after the end of September.
How does corporate concentration affect dumping?
The WTO rules on anti-dumping allow governments to take action to counteract the impact of exporting companies that sell to the foreign customer at prices lower than they sell in their home country. However, Canada’s grain trading sector, including canola crushing, operates in a monopolistic, rather than a competitive, market. The decision-maker for selling prices of export canola are the commodity traders, such as Archer Daniels Midland (ADM), Bunge, Cargill, Richardson and Viterra, that make deals with foreign buyers. These are the same companies that buy canola from farmers at the elevator. The canola crushing plants in Canada are owned by Louis Dreyfuss Company, ADM, Cargill, Richardson, and Bunge. Bunge recently acquired Viterra, and Bunge also owns 25% of G3. Most domestic sales of canola from elevator companies to crushing plants are between parent companies and their subsidiaries. Companies that buy canola from farmers and do not own crush plants are much smaller than the big five, and thus are not dealing with a competitive marketplace. So how is the domestic price/cost of production in the Canadian canola industry determined? The relationship between the price paid to farmers and the domestic and international sale price of canola is not transparent. While futures market prices are often cited when commentators discuss trade risks, these reflect the bets of hedge funds, speculators, and commodity traders who benefit from volatility, not actual prices.
When the Canadian Wheat Board existed it had excellent business relationships with customers in 70 countries. There was price transparency for farmers, and the entire value of the crop was returned to farmers every year via final payments. The goal of the CWB was to get the best price possible for wheat and barley exports and wheat sold domestically for human consumption, and to sell the entire crop each year. If we had a similar single desk selling agency today that included canola, there is little chance that dumping would occur, as the CWB looked for premium markets that would pay more for quality, and if there was a dispute it would be a straightforward matter to calculate any difference between the domestic and export price in any market to resolve the issue.
How will Canada deal with this tariff?
The recent decision to raise the cap on AgriStability payouts from $3M per farm to $6M per farm has increased available compensation for revenue impacts of the tariffs, especially for the largest farms. Canada’s canola sector has a high degree of vertical integration making it unclear whether compensation for farmers affected by tariffs will remain in farmers hands or simply flow through to the vertically integrated seed/chemical companies providing agricultural inputs and the vertically integrated grain traders who buy from farmers, process canola for domestic and export markets, and export commodity canola.
China announced its anti-dumping investigation after Canada announced 100% tariffs on Chinese electric vehicles, and 25% tariffs on steel and aluminum a year ago in alignment with American tariffs and with the EU’s lower tariffs on these Chinese exports. This anti-dumping duty is clearly an attempt to pressure Canada to reduce or remove those tariffs. China has learned that targeting canola is a politically powerful tool, as certain Canadian politicians are willing to intensify the impact of the tariff by using the issue to stoke divisiveness between regions and industries. The larger context of trade and tariff uncertainty and erratic behaviour from the USA will complicate Canada/China tariff negotiations. Cool heads and a view to what is in Canada’s and farmers’ interests for both food sovereignty and economic sovereignty should guide those Canadian leaders responsible for negotiating solutions.
