Canadian farmers could significantly change canola, wheat and barley acreage after China and US impose tariffs

Canadian farmers are in a difficult situation as tariffs on Canadian peas, canola oil and meal imports to China went into effect on March 20, and the United States could impose a number of tariffs on Canadian goods in two weeks. Uncertainty about export prospects could change canola planting plans, exacerbating the global canola shortage in the new season.

In response to Canada's tariffs on Chinese electric vehicles, aluminum, and steel products imposed in October 2024, China imposed a 100% tariff on imports of Canadian peas, canola oil, and meal worth more than $1 billion and a 25% tariff on imports of Canadian pork and seafood worth $1.6 billion on March 20. At the same time, unprocessed canola seeds will not be subject to the tariff.

Also, China, which is the main buyer of Canadian canola and the second largest importer of Canadian canola meal after the United States, is conducting an anti-dumping investigation into canola seed supplies from Canada.

The Canadian government said that the country is disappointed by China's decision to impose retaliatory tariffs, but remains open to dialogue with Beijing.

China imposed its tariffs at the height of the Canada-US trade war, after Trump on March 6 postponed the introduction of 25% tariffs on certain Canadian goods for 30 days and threatened to impose additional tariffs on April 2.

Against this background, Canadian farmers have become more cautious, reduced purchases of new agricultural machinery, and increased the number of applications for government interest-free loans.

The Canadian Food Inspection Agency said the country would increase support for farmers affected by tariffs by increasing the compensation rate from 80% to 90% and doubling the payment limit for 2025 to $3 million. The government also allowed provincial and territorial governments to enter into agreements in advance to issue interim payments at a higher rate and initiate targeted advance payments in the event of tariffs or outbreaks of ASF in pork.

In provinces that adopt the changes, producers participating in the AgriStability support program will be eligible for an interim payment of up to 75% of the estimated final payment. If the analysis confirms that market disruptions have resulted in losses sufficient to trigger AgriStability payments, the administrator will be able to set targeted advance payments.