Agriculture sector worries about retaliation as Canada considers tariff increases on Chinese electric vehicles

International trade experts say several sectors could be at risk of tariffs or boycotts if Canada continues to implement tariff increases on Chinese-made electric vehicles.

The agricultural sector in particular fears it could become a prime target for retaliation.

On Monday, the federal government announced a 30-day shutdown consultation period examining policy responses to China’s “unfair trade practices” that affect the domestic market. It will announce trade measures after consultations.

Potential answer is an additional tax on top of the rates for electric vehicles from China, similar to the move taken by the Commission United States in May. The European Commission also announced temporary tariffs of 17 to 38 percent on Chinese electric vehicles from July 4.

Tesla cars sit at the Tesla Giga Texas auto plant in Austin, Texas, on Thursday, Feb. 16, 2023. U.S. regulators have pressured Tesla to recall nearly 363,000 vehicles equipped with its — The only Chinese electric vehicles currently imported into Canada are Teslas manufactured at the US tech giant’s factory in Shanghai. Chinese vehicles are subject to customs duties, but under Section 53 of the Customs Tariff Act, Canada can impose an additional tax on customs duties. (Jay Janner/Austin American-Statesman/The Associated Press)

Tesla cars parked at the Tesla Giga Texas auto plant in Austin, Texas, on Thursday, February 16, 2023. U.S. safety regulators have pressured Tesla to recall nearly 363,000 — The only Chinese electric vehicles currently imported into Canada are Teslas manufactured at the US tech giant’s factory in Shanghai. Chinese vehicles are subject to customs duties, but under Section 53 of the Customs Tariff Act, Canada can impose an additional tax on customs duties. (Jay Janner/Austin American-Statesman/The Associated Press)

Carlo Dade, director of the Canada West Foundation’s trade and infrastructure center, says he suspects the outcome of the consultations is a foregone conclusion, given the significant pressure from the United States to align with its China policy.

And that could spell bad news for some sectors.

“When you take actions like imposing tariffs, you naturally expect retaliation. This is part of the international trade strategy, i.e. tariff retaliation,” Dade said.

Dade says that if China decides to go this route, he expects agriculture and animal husbandry to become among its key retaliatory targets, along with other products the country could source elsewhere or restrict.

According to the foundation latest abbreviation As for China’s relations with the Canadian West, in recent disputes, China has recently targeted agricultural imports from France – an “easy target” -. Dade says there are lessons to be learned for Canada from this situation.

Gordon Houlden, director of the China Institute at the University of Alberta, says there are many good reasons to share biological samples between labs, but any transfers must follow appropriate protocols. — Gordon Houlden, director of the China Institute at the University of Alberta, says pork, beef and canola could be among the targets China is considering for retaliation. (Terry Reith/CBC)

Gordon Houlden, director emeritus of the China Institute at the University of Alberta, agrees.

He says he wouldn’t be surprised if there were any retaliatory measures, and predicts that all sectors that China has targeted in the past are potentially vulnerable.

“We’ve seen pork, beef and canola grow in popularity over the last few years, so it’s possible they’ll come back on the same list, but not necessarily,” Houlden said.

“I’m pretty sure the Chinese will probably wait until the end of the consultations and then choose their targets.”

Houlden says that no matter how it plays out, history shows that China’s counter-tariffs and boycotts tend not to last.

“This is our source of income”

Near Claresholm, south of Calgary, Stephen Vandervalk worries about the consequences for Alberta’s agricultural industry.

He is vice-president of the Wheat Growers Association, and also grows rapeseed, barley, durum and hay.

“Absolutely every decision you make with China affects something else – that’s what they do. They will hold another industry hostage over the decision made here,” Vandervalk said.

Wheat grows at the Central Experiment Farm in Ottawa in July 2022. — The vice president of the Calgary-based Wheat Growers Association expresses frustration and concern that the federal government’s decision could impact the agricultural sector. (Chris Rands/CBC)

He’s seen this before, like when China banned Canadian canola for three years. He says farmers are still struggling with the effects of the ban officially abolished in 2022

“China has to retaliate somehow and historically it has retaliated (by) not buying agricultural products.”

China is among Canada’s main markets for exports of grains and oilseeds.

In Vandervalk’s case, the blame falls on the federal government. He wants them to keep these consequences in mind when making these decisions.

“It’s very frustrating because it’s our livelihood.”

Returning to the Canada West Foundation, Dade says this political fight likely won’t end anytime soon.

“Balancing pressure from the United States to align with its China policy with the needs of our export economy – where China is the largest producer and consumer of most of what we export to Western Canada – will be a struggle for this generation,” Dada said.

“China isn’t going anywhere, neither is the United States, and in a sense we’re stuck between the two. We’ll have to figure this out.”

Houlden says government and industry should increase efforts to diversify markets to mitigate future risks.

CBC News reached out to the Alberta Ministry of Agriculture and Irrigation but had not received comment by press time.