Canada holds the upper hand on canola deal

By Lethbridge Herald on November 14, 2025.

Doug Firby
Troy Media

Canada appears to be closing in on a trade détente with China, which could once again open that market to our canola products. As tantalizing as that prospect is, our negotiators should not forget they don’t have to give away the farm to get this deal.

Canola is Canada’s most valuable crop, generating billions in exports each year. Roughly 90 per cent of what we grow is sold abroad, and China has long been one of the top buyers. That’s why Beijing’s decision to impose a 100 per cent tariff on Canadian canola oil and meal and a 75.8 per cent tariff on canola seed in mid-August has hit farmers so hard.

The move was retaliation for Ottawa’s 100 per cent tariff on Chinese-made electric vehicles. Ottawa said the tariff was needed because Chinese automakers enjoy massive state subsidies, allowing them to sell EVs at artificially low prices that could overwhelm Canadian and U.S. producers.

Saskatchewan exported $96 million in goods to China in August—about three-quarters less than in August 2023 when agricultural exports to China totalled $3.7 billion, making it Saskatchewan’s second-largest agri-food export destination.

China’s ambassador to Canada, Wang Di, says the solution is simple: if Canada drops the EV tariff, China will remove its agricultural tariffs. But Canada may not need to go that far.

China cannot easily replace millions of tonnes of high-quality Canadian seed. Imports from India and Australia don’t match the volume or quality, and Chinese futures markets are already showing strain. If farmers can weather the chill, Canada may have more leverage than expected.

The European Union offers another example. It keeps a 30 per cent tariff on Chinese EVs but exempts those made in EU factories. The result has been billions of dollars in Chinese investment, as automakers and battery firms build new plants and partnerships.

“Tariff barriers will push Chinese automakers to accelerate localized production,” said Fu Bingfeng, secretary-general of the China Association of Automobile Manufacturers. “As of 2025, five Chinese automakers have announced plans to build factories in Europe, with total investment surpassing 20 billion euros ($36.2 billion). Once operational, these plants will help evade tariff costs and improve the supply chain.”

BYD, China’s largest EV maker, is building a factory in Hungary and planning another in Turkey. Major battery makers such as CATL have also invested heavily in Europe. These moves show how well-designed tariffs can attract jobs and technology instead of pushing trade away.

European automakers, rather than resisting, are cooperating with Chinese firms, saying the partnerships strengthen supply chains, improve electrification and support local research.

Canada lacks the EU’s market clout, but it could still serve as a North American toehold for Chinese automakers, especially as our domestic industry faces decline. The 1965 Auto Pact gave Canada guaranteed production shares and jobs in exchange for open access to the U.S. market, anchoring our auto industry for decades. But that arrangement has steadily eroded.

U.S. President Donald Trump’s push to shift all auto manufacturing to the United States is accelerating the trend. Stellantis has announced it will move Jeep production from Brampton, Ont., to Illinois, while Ford and GM are also scaling back in Canada. As the Detroit Three edge toward the exits, Canada needs new partners.

Emulating the EU approach, maintaining tariffs to guard against cheap, subsidized imports while encouraging investment and joint ventures, could help preserve jobs and bring capital to our auto industry. Partnerships of this kind could even breathe life into projects like Project Arrow, a Canadian-designed concept vehicle showcasing the country’s ability to build a zero-emissions car. A real partnership with Chinese automakers could turn that demonstration into production, making Canada more than just a branch plant economy.

The stakes are high. Canada’s auto sector still supports about 125,000 direct jobs, and losing more ground would further weaken our manufacturing base.

There are risks, however. Canadians can’t ignore China’s human rights abuses, from the treatment of Uyghurs in Xinjiang to the crackdown in Hong Kong. And trading dependence on Washington for reliance on Beijing is hardly a cure-all. Any deal must be negotiated from a position of strength, with safeguards to protect Canadian workers and sovereignty.

Which brings us back to canola. China needs it. We’re willing to sell it. But we don’t have to—nor should we—give away the farm.

Doug Firby is an award-winning editorial writer and formerly served as Editorial Page Editor at the Calgary Herald.

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