China announced on Saturday that it will impose retaliatory tariffs on some Canadian goods, marking a further escalation in the global trade war. Beijing stated that it will impose 100% tariffs on rapeseed oil, oil cakes, and peas, alongside a 25% import levy on aquatic products and pork from Canada, effective 20 March.
Intensifying China-Canada trade conflicts
In October, Ottawa slapped a 100% import levy on Chinese electric vehicles and a 25% tariff on steel and aluminum. The Chinese government said in a statement on Saturday: “Canada’s measures seriously violate the rules of the World Trade Organization, are typical acts of protectionism, constitute restrictive measures against China, and seriously damage China’s legitimate rights and interests.”
According to the Canadian government, rapeseed (Canola) is the country’s second-largest acreage crop, generating C$13.6 billion (€8.73 billion) in sales in 2023. Canadian canola meal and canola oil exports to China amounted to C$920.9 million (€591.3 million) and C$21 million (€13.5 million) respectively in 2024. Meanwhile, Canada’s pea exports to China reached C$303 million (€194.5 million) in 2024.
China’s move followed a series of tariff decisions by US President Donald Trump last week, including 25% tariffs on Canada and Mexico while doubling Chinese import levies to 20%. Shortly after, Trump granted a one-month exemption on auto and some agricultural tariffs for Canada and Mexico under USMCA rules, as both countries signalled a willingness to review tariffs on Chinese imports.
The Canadian Global Affairs said in a statement on Saturday that China’s tariff announcement is “unjustified,” and added: “Canada does not accept the premise of China’s investigation, nor its findings.” The statement indicated that it addresses “China’s non-market policies and practices that artificially lower production costs and distort markets. Canada remains open to engaging in constructive dialogue with Chinese officials to address our respective trade concerns.”
China’s inflation turns negative
According to data released over the weekend, Consumer prices in China fell 0.7% year on year in February, turning negative for the first time in 13 months, highlighting ongoing sluggish consumer demands. At the government’s annual meeting last week, Beijing set the gross domestic product (GDP) growth target at 5% for 2025 and announced additional stimulus measures to bolster the economy. However, the 5% growth target could be challenging for the world’s second-largest economy, given ongoing weak domestic demands and intensifying trade tensions with the US and other countries.
China outlined trillions-of-Chinese-Yuan’s stimulus package to support its economic growth as Beijing pledged to adopt a “proactive fiscal policy and a more moderately loose monetary policy” in December last year. The Chinese government also lowered its inflation target to 2%-the lowest in more than two decades-while raising the deficit level to a three-decade high of 4% GDP.
Chinese stock markets and the Chinese Yuan slip
On Monday, both the Chinese Yuan and the Chinese stock markets slumped amid intensifying trade tensions and disappointing inflation data. The Chinese Yuan fell 0.22% against the US dollar and the Hang Seng Index slipped 1.7% at 4 am CET. However, both the Yuan and the Chinese stock markets have been rallying this year, partly driven by the launch of DeepSeek’s AI model in January, a Chinese startup aiming to compete with leading US AI models.
SOURCE: EURONEWS
