China’s Canadian canola probe consolidates a trade war

Tariff wars are a recurring feature in the global trading system, and tensions between China and Canada have been ongoing for years. These tariff wars are largely driven by geopolitical tensions.

In 2019, for instance, China banned Canadian meat imports following the detention of Huawei’s chief executive officer, Meng Wanzhou. Although China cited the use of banned feed additives in Canadian meat as the reason, many viewed it as a diplomatic response to the rift between Ottawa and Beijing.

Now, China is threatening to investigate Canada for potential dumping of canola into its market. In international trade, dumping is a type of price discrimination where a product is sold at different prices in domestic and export markets. Essentially, it involves selling a product in a foreign market at a price lower than its normal value in the home country.

This decision came after Canada imposed a 100% tariff on electric vehicles and a 25% tariff on steel and aluminum from China, effective October 1, 2024. It’s clear this move by China is a direct retaliation for the tariffs on electric vehicles.

Trade tensions between countries can severely disrupt international trade. My previous research demonstrated how trade tensions between Canada and the United States during Donald Trump’s presidency negatively impacted trade between the two countries, particularly in the agri-food sector.

The mere threat of an anti-dumping duty can discourage imports, making anti-dumping laws a form of non-tariff barrier, even when the duty is not actually imposed. Although China has only announced a dumping investigation, the prices of canola oil futures are already being impacted.

Anti-dumping procedures

As members of the World Trade Organization (WTO),