China responds to Canada’s EV tariffs with rapeseed probe

China will start an anti-dumping probe into rapeseed imports from Canada, with trade tensions escalating after Justin Trudeau’s government imposed tariffs on Chinese-made electric vehicles, steel and aluminum.

The Asian nation is initiating measures following relevant restrictive actions taken by Canada, according to a statement from the Ministry of Commerce. China will take all necessary actions to safeguard the legitimate rights and interests of Chinese companies, the agency added.

Canada announced a 100% levy on electric cars and 25% on steel and aluminum last month, joining western allies to protect domestic manufacturers. Rapeseed is used to produce oil for cooking or industrial purposes, and China is the world’s second-biggest importer of the commodity.

The most actively traded rapeseed meal and rapeseed oil futures on China’s Zhengzhou Commodity Exchange surged at least 6% on Tuesday.  Canola futures in North America fell by the exchange limit in the biggest intraday loss since August 2022, on fears that lower Chinese demand could result in a glut at home.

More than 90% of China’s total rapeseed imports last year were from Canada, totaling 5.05 million tons, according to Chinese customs data. The variety of the crop grown in Canada is also known as canola.

China has targeted Canada’s trade before, halting shipments of canola in 2019 following the arrest of a top Huawei Technologies Co. executive in Vancouver on an American extradition request. The Asian nation has recently launched other probes, including into dairy imports from the European Union.

Canada was suspected of dumping rapeseed shipments, and such unfair trade practices have caused losses locally, the ministry in Beijing said, citing an appeal from the domestic sector.

Palm oil futures rose 1.1% in Malaysia on speculation that the probe may spark increased demand for alternative oilseeds.