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Beijing has said it will open a trade probe into canola imports from Canada and hit out at Ottawa’s decision last week to raise tariffs on Chinese steel and electric vehicles.
China’s commerce ministry on Tuesday said Canada had “significantly” increased exports of the agricultural product and was “suspected of dumping”, adding that domestic manufacturers had incurred losses as a result.
Canada last week said it would impose 100 per cent tariffs on Chinese-made EVs and a 25 per cent levy on Chinese steel and aluminium, following similar measures this year from the US and EU.
The move — which was announced a day after US national security adviser Jake Sullivan met Prime Minister Justin Trudeau in Canada — is the latest example of the US and its allies taking actions to counter China.
Washington has been urging its allies to join the US in its anti-China measures. In Canada, Sullivan said having a “united front” would be more effective and would help the US and its allies and partners.
The Chinese statement added that Beijing was “extremely dissatisfied” with Canada’s use of what it called “discriminatory unilateral restrictive measures”, adding that it would complain to the World Trade Organization and open a domestic investigation into certain Canadian chemical imports.
The move marked the latest escalation in trade tensions centred on China’s booming EV industry, which has prompted fears abroad of excessive production and falling prices. Beijing last month filed a WTO complaint over the EU’s planned tariff increases on Chinese-made EVs.
China also opened an anti-dumping investigation into imported dairy products from Europe a day after the bloc announced the new levies on EV imports, prompting a backlash from EU trade bodies.
It is also investigating alleged dumping of European pork imports, in another move targeting the EU agriculture sector.
Last week, Beijing declined to impose tariffs on French cognac producers after an eight-month investigation but accused them of dumping brandy.
Canola futures on the Zhengzhou Commodity Exchange rose 4.9 per cent on Tuesday, while those of canola meal rose 6 per cent.
Canada is the world’s largest exporter of canola, a grain widely used to produce vegetable oil. The country counts China as its second-largest market for the commodity, according to the Canola Council of Canada, an industry association.
Canada’s canola shipments to China were $3.47bn in 2023, up 170 per cent from a year earlier by volume, the commerce ministry spokesperson said, without referring to year-on-year growth by dollar value.
China’s steel exports are set to surpass $100bn this year, the highest level since 2016, according to Shanghai-based consultancy MySteel, threatening to further inflame trade tensions.
While economists expect the impact of the current measures to be relatively small, the upcoming US presidential election in November has raised the prospect of additional escalation.
Morgan Stanley analysts on Tuesday pointed to the possibility of 50 per cent tariffs on Chinese products in the event of a second Donald Trump presidency, adding that such measures “could be a meaningful adverse effect on Asia’s growth”.
In 2019, China blocked imports of canola seed from two Canadian grain trading companies, alleging it had detected insects. The move came at a time of escalating tensions following Canada’s arrest of Chinese tech giant Huawei’s chief financial officer Meng Wanzhou in Vancouver.
The trade ban was lifted in 2022, months after the countries completed a prisoner swap in which Meng was freed in exchange for the release of two Canadians detained in China following her arrest.
The Canadian tariffs were announced a month after Mélanie Joly made the first trip to China by a Canadian foreign minister in seven years.
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