China to launch anti-dumping investigation into Canadian canola exports

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Beijing said it would open a trade investigation into Canadian canola imports and backtracked on Ottawa’s decision last week to raise tariffs on Chinese steel and electric vehicles.

China’s Ministry of Commerce said Tuesday that Canada had “significantly” increased exports of the agricultural product and was “suspected of dumping,” adding that domestic producers had suffered losses as a result.

Canada said last week it would impose 100 percent tariffs on Chinese-made electric vehicles and a 25 percent tax on Chinese steel and aluminum, following similar measures this year from the U.S. and EU.

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 an internal investigation into certain chemical imports Canadian.

The move marked the latest escalation in trade tensions centered on China’s booming electric vehicle industry, which has sparked fears abroad of overproduction and falling prices. Beijing filed a complaint at the WTO last month over planned EU tariff increases on Chinese-made electric vehicles.

China also opened an anti-dumping investigation into imported dairy products from Europe a day after the bloc announced new tariffs on electric vehicle imports, prompting a backlash from EU trade bodies.

It is also investigating alleged dumping of European pork imports, in another move aimed at the EU’s agricultural sector.

Last week, Beijing refused to impose tariffs on French cognac producers after an eight-month investigation, but accused them of dumping cognac.

Canola oil futures on the Zhengzhou Commodity Exchange rose 4.9 percent on Tuesday, while canola meal futures rose 6 percent.

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 $3.47 billion in 2023, up 170 percent from a year earlier, the Commerce Ministry spokesman said, without specifying the annual dollar growth.

China’s steel exports are set to top $100 billion 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 further escalation.

Morgan Stanley analysts on Tuesday highlighted the possibility of 50% tariffs on Chinese goods in the event of a second Donald Trump presidency, adding that such measures “could be a significant negative effect on Asian growth”.

In 2019, China blocked canola seed imports from two Canadian grain trading companies, claiming it had detected insects. The move comes 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 concluded a prisoner swap in which Meng was released in exchange for the release of two Canadians held in China after her arrest.