By Fen Osler Hampson

September 6, 2025

Saskatchewan Premier Scott Moe is currently in China, accompanied by Prime Minister Mark Carney’s parliamentary secretary, Kody Blois. Their three-day mission is to negotiate relief from China’s punishing canola tariffs, which have slowly put a stranglehold on Canada’s $43 billion a year canola sector.

In March, Beijing slapped 100% duties on Canadian canola oil and meal. In August, a further 75.8% anti-dumping tariff landed on canola seed, effectively shutting Canadian producers out of their second-largest market, unmistakably timed with the fall harvest for maximum impact. A record 200,000 to 400,000 tonnes of canola meal have been stuck in Chinese ports because importers don’t want to pay the duty, further depleting the cash flows of prairie farners.

Canada crushed a record 11.4 million tonnes of canola in 2024, or roughly half of the total crop yield, with the U.S. buying unprecedented volumes of oil and meal (3.5 million tonnes of oil and 3.8 million tonnes of meal in 2024). China is the second-largest buyer, the first for Canadian canola seed. Last year, before tariffs struck, China imported 5.9 million tonnes of canola seed from Canada, or roughly two-thirds of our total seed exports, at a value of some $4 billion.

The one piece of good news is that China has decided to stretch out its review of Canadian canola imports, thus allowing time for further negotiations. At the same time, Ottawa has just announced that it is reviewing its own tariffs on Chinese electric vehicles (EVs), which are the basis of China’s retaliation on Canadian canola and could help break the deadlock with Beijing.

Let us hope that these efforts will lead to some kind of short-term reprieve, or perhaps even a more substantial and durable outcome. But even if Premier Moe and his team are successful, Canada risks repeating a common error. Every time we face a crisis, we go for the short-term “fix” (i.e., remove the irritant and get back to business-as-usual) while failing to address the underlying problem, which is export dependence on a major market. This is a longer-term leverage risk to Canadian farmers and feed processors, which is why it arises when trade wars erupt, whether with China or the U.S.

Diversification of Canada’s export markets for canola to reduce our dependence on China is a strategic necessity, just as it is now with much of our trade with the United States. There are now promising possibilities to increase canola exports to the European Union, Japan, South Korea, and Latin America. The EU’s latest rapeseed harvest fell short of its 23-million-tonne crush capacity, thereby boosting EU demand for imports. Australia, the EU’s primary supplier, can sell more but is also looking to increase its own sales to China to fill the demand created by the tariffs on Canada’s canola. Canada, in turn, can divert sales from China to Europe. Rising prices for palm oil and olive oil are increasing the appeal of substitutes, like canola oil, especially in Japan and South Korea.

However, to inoculate our canola against weaponized trade, Canada requires a long-term strategy with four core elements.

Diversification of Canada’s export markets for canola to reduce our dependence on China is a strategic necessity, just as it is now with much of our trade with the United States.

First, we need to further enhance our downstream processing capacity for canola. Canada’s crush capacity now nears 14.6 million tonnes. However, investment in new facilities and plant upgrades has stalled, especially given regulatory uncertainty on cleaner, biofuel rules. Canola biofuel producers will require clarity on federal policies, such as low-carbon fuel credits, so that they can invest with confidence. There may be some potential for biofuel exports to the U.S. because the Trump administration is sticking with the U.S. Renewable Fuel Standard. However, preference is now being given to American producers. Europe, which has strong biofuel demand and no such preferential restrictions, may be a better and safer bet.

Second, accordingly, Canada must negotiate long-term supply contracts with buyers for canola seed and products in Europe, Japan, Mexico, and other parts of the world. Those agreements should be paired with robust credit lines and risk insurance through Export Development Canada to attenuate the impact of tariff shocks or outright embargoes. This also will build market resilience for Canadian producers.

Third, Canada also must invest in on-farm and rail storage capacity. This will require direct financial support and/or tax credits for producers and transporters to properly store canola in the event of a sudden closure of export markets. If the moisture content is carefully managed, canola can be stored for up to 10 months. This will give producers time to find new markets for their exports or make appropriate arrangements with intermediaries to resell canola through the backdoor to countries targeting our products, as was the case with the United Arab Emirates during the earlier canola standoff with China in 2019-22.

Fourth, Canada should also press its case through the WTO, where it has challenged Chinese tariffs on its canola meal and oil exports (along with peas, pork, and seafood products). China has also mounted its own challenge against Canada for its tariffs on EVs, steel, and aluminum. At the same time, we must also be realistic about the WTO’s ability to render a judgment on these cases because, due to an American boycott, its appellate body does not have enough members to hear an appeal.

Premier Moe may get China to the negotiating table in this dispute, especially since Beijing has granted a six-month extension to its anti-dumping investigation on canola seed. And the two countries may strike a bigger deal involving Canadian relief on Chinese EVs in exchange for some tariff relief on canola.

However, Canada’s long-term vulnerability to Chinese pressure will only be alleviated by a set of policies that simultaneously enhance domestic processing, reduce our export dependence on the Chinese market by diversifying our trading partners, and create operational flexibility with storage facilities and proactive arrangements with intermediary suppliers to buffer against supply shocks in the future.

At the same time, even as the status-quo pillars of global trade are being disrupted, we must try to make effective use of existing multilateral trade forums to adjudicate trade disputes. That way, the next time we are struck with tariffs or a trade boycott against our canola, we won’t be so vulnerable.

Policy Contributing Writer Fen Osler Hampson, FRSC, is the Chancellor’s Professor and Professor of International Affairs at Carleton University, and President of the World Refugee & Migration Council. He is co-chair of the Expert Group on Canada-US Relations.