China escalates Canada trade spat with more canola levies

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China will implement more levies on Canadian rapeseed after an anti-dumping probe, escalating a trade spat that’s disrupted crop flows.

The Asian nation plans to impose a 75.8% duty from Aug. 14 after a preliminary ruling that Canadian imports constitute dumping, according to a statement from China’s commerce ministry. Benchmark futures in New York tumbled as much as 4% following the announcement, reaching the lowest since April.

Earlier this year, Beijing imposed a 100% tariff on rapeseed oil and meal from the North American nation, where the crop is known as canola, in response to Canadian levies on Chinese-made electric vehicles, steel and aluminum. The latest measures leave Ottawa battling trade wars on two fronts, following the implementation of duties from President Donald Trump.

China has targeted Canada’s supply before, halting shipments of canola in 2019. This time, it comes as Beijing is also locked in a trade dispute with the US, another of its top oilseed suppliers. The country hasn’t yet booked any US soybeans for the upcoming marketing year, according to data as of late July, and Trump this week urged China to boost its purchases.

“It is unusual for the top importer of oilseeds to court trade friction with a second of the largest exporters,” Mike Verdin, a consultant at CRM AgriCommodities, said by email.

China’s probe found Canada’s rapeseed sector received significant government subsidies, and supply and demand was distorted, a separate statement from the commerce ministry shows. Beijing will continue the investigation and make a final decision based on its findings.

The move could throttle trade flows and threaten supplies of rapeseed meal, a key animal feed ingredient considered essential for China’s massive aquaculture sector. Beijing has been making efforts to diversify its supply, tapping producers from Australia to India.

The Asian nation imported 6.39 million tons of rapeseed last year, with almost of all of the shipments coming from Canada, according to Chinese customs data. The trade was worth more than $3 billion.

For Canadian canola, demand from other markets, like Japan, Europe and Mexico, could temper some of the price shock, Verdin said. Still, discounts are likely and the country will be more reliant on domestic crushing, he said.