Industry figures estimate the canola sector lost more than $1.5 billion during the previous dispute
A prolonged trade dispute between Canada and China could have significant effects on Canada’s canola sector, a new report says.
“While there is no certainty on when (or even if) China will levy tariffs, how meaningful they could be, and how long they would remain in place, the tariffs could have a meaningful impact on global canola trade flows and by extension Canada’s grain handlers,” Morningstar DBRS, a credit ratings agency, said in a Sept. 5 report.
The last time Canadian canola found itself in the crosshairs of Chinese retaliation, China restricted canola imports from March 2019 to May 2022.
The Canola Council of Canada estimated between March 2019 and August 2020, the canola sector lost upwards of $2.35 billion.
A similar hit is possible, Morningstar DBRS’s report says.
“Another punitive trade action could prove to be equally as costly for Canada,” the report reads.
The Chinese government indicated it will respond to the Canadian government’s decision to place 100 per cent and 25 per cent tariffs on Chinese electric vehicles, and Chinese steel and aluminum, respectively.
Guy Saint-Jacques, a former Canadian ambassador to China, told CBC he expects the tariffs to be 100 per cent.
Farmers are concerned about how this situation will play out.
“A political decision on the other side of the world has a direct impact on our bottom line,” John McKee, a farmer from Stirling, Alta., told Global News. “This is one more thing we’re going to deal with that comes out of left field. That is just a frustration.”
China’s announcement that it’s launching an anti-dumping investigation into Canadian canola sent prices down by about one dollar.
McKee told Global News that drop was equal to about $100,000 of revenue on his farm.