China Announces Canola Probe in Response to Canada’s EV Tariffs

Canada announced a 100 per cent levy on electric cars and 25 per cent 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 six per cent 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 per cent of China’s total rapeseed imports last year were from Canada, totaling 5.05 million tonnes, 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 per cent in Malaysia on speculation that the probe may spark increased demand for alternative oilseeds.

With assistance from James Mayger, Eko Listiyorini and Celia Bergin