Beijing | Reuters — China on Friday prolonged its probe into Canadian canola imports, buying six more months for negotiations that could ease a year-long trade dispute sparked by Ottawa’s tariffs on Chinese electric vehicles.

The Ministry of Commerce said the anti-dumping probe would now run until March 9, 2026, citing the complexity of the case, a statement showed.

Beijing, the world’s largest importer of canola, imposed preliminary duties of 75.8 per cent on Canadian canola seed imports in August. A final ruling could result in a different rate, or overturn the decision.

“The extension buys some time for both sides to seek a negotiated solution,” said Even Rogers Pay, an analyst at Beijing-based Trivium China who specialises in agriculture.

“Ultimately, the best case scenario for Beijing would be to strike a deal in which it drops the investigation and Canada lifts tariffs on Chinese vehicles and metals. But given the complexities involved as Canada tries to keep its U.S. trade relationship stable, that will be easier said than done.”

Canada, the world’s largest exporter of canola, shipped almost C$5 billion of canola products to China in 2024, about 80 per cent of which was seed. The steep duties on canola seed, if they remain in place, would likely all but end those imports.

China, which relies on Canada for nearly all of its canola seed supplies, also imposed tariffs on canola oil and meal in March. Canada, in turn, has imposed tariffs on Chinese steel and aluminum.

Ottawa has grown increasingly anxious about losing a key customer, especially as China appears to be pivoting towards Australian supplies.

On Wednesday, Prime Minister Mark Carney said he and other senior officials would work to resolve the canola dispute.

Carney’s Parliamentary Secretary, Kody Blois, and Saskatchewan Premier Scott Moe are heading to China from Sept. 6-9 to meet with Chinese officials and discuss trade issues, including China’s duties and tariffs on Canadian canola.

Saskatchewan is the Prairie province that produces about half of Canada’s canola, the majority of which is exported.

In July, Reuters reported that Canberra is close to an agreement with Beijing that would allow Australian suppliers to ship five trial canola cargoes to China.

The following month, Chinese state-run trading firm COFCO booked the first new-crop Australian canola, marking China’s first imports from Australia since 2020.

The Winnipeg ICE canola futures market initially rose on Friday after the China news broke, but a trader said some market participants might have been misinterpreting the headline as meaning China had suspended its duties, rather than extending the preliminary duties until March.

“There might have been some confusion about that,” said RBC Dominion Securities trader Mitch Summers about the early C$10 per tonne surge, which soon subsided to a more modest early session gain.

“The news kind of dampens bullish expectations for farmers this fall,” said Summers.

Canada’s canola industry has been hoping for an early resolution to the canola duties and tariffs.

(Reporting by Ethan Wang and Ryan Woo; additional reporting by Ed White; Editing by Kevin Liffey, Sharon Singleton, Alexandra Hudson)

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China’s Ministry of Commerce launched an anti-dumping probe into Canadian canola last September, largely in response to Canada’s imposition of 100 per cent tariffs on Chinese electric vehicles. Tariffs on Canadian canola oil and meal have been in place since March. The anti-dumping investigation is set to formally end this September, and an adjustment to the final duty is possible.

Effect on Canadian farmers

“With this preliminary determination of dumping for canola seed together with the existing 100 per cent anti-discrimination tariffs on canola meal and oil, the Chinese market is effectively closed to the Canadian canola industry,” said Chris Davison, President and CEO of the Canola Council of Canada (CCC) in a news release.

“This tariff will have an immediate and substantive impact on farmers’ marketing opportunities for the 2025 canola crop,” added Rick White, president and CEO of the Canadian Canola Growers Association (CCGA) in the joint release with the CCC. “Canadian farmers are globally competitive and if a solution is not found swiftly, the impact will be quickly felt on our farms and in our rural communities,” White added.

Both CCC and CCGA will continue all efforts to resolve this issue for Canadian canola farmers and the broader value chain, said the release. The groups were calling for immediate support from the federal government as the industry navigates the market closure.

Exports already expected to be pulled back

“As a headline, it’s awful,” said analyst Mike Jubinville on the latest news. However, he noted that with diminished supplies in 2025/26, “we were going to have to pull back exports to some extent anyways.”

Canada has experienced trade issues with China in the past, with those previous limits on direct business leading to shifts in trade flows like increased sales to the United Arab Emirates, who crushed the seed and sent the processed oil and meal to China. Jubinville noted that other exporters like Australia can’t replace all the lost Canadian business and expected to see similar adjustments in the global trade.

China had accounted for roughly half of all of Canada’s canola exports in 2024/25, taking 4.6 million tonnes out of the total 9.1 million tonnes exported in the 11 months of data through June.

Phil Speiss, senior commodity futures specialist with RBC Dominion Securities, said the trade was already penciling in a 2.5 million-tonne reduction in canola exports in 2025/26 from the 9.5 million tonnes expected to have moved in 2024/25, and noted that values were looking overbought at levels prior to the China news.

The market needed a readjustment, added Tony Tryhuk, director of trading with RBC. He said the resulting downturn in prices should prompt more selling from farmers who had been holding out for higher prices despite improving crops, while also bringing in more commercial buying interest.

November canola had settled at C$680.80 per tonne on Aug. 11 — one day before the Chinese anti-dumping announcement. Prices dropped their C$45 per tonne daily limit in immediate response to the Chinese duties but settled well off that level with November down C$30.50 on the day at C$650.30 per tonne on Aug. 12.

With China out of the market, Canada can expect to sell more to other customers like Europe, Japan, Mexico and the United States. However, “all of those guys know that without China the price is going lower, so they don’t have to be aggressive on their bids,” said Speiss.

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The Canadian International Trade Tribunal published its decision on Monday and said in a news release that it had terminated its inquiry into the matter.

The investigation was launched in early March after British Columbia-based Tidewater Renewables Ltd. filed a complaint with the Canadian Border Services Agency.

Tidewater alleged that due to an increase in the volume of dumped and subsidized U.S. imports, it lost market share and sales, and saw depressed prices and profitability.

The complaint was not related to ongoing trade disputes with the U.S., the company said.

The tribunal is an independent, quasi-judicial body that reports to Parliament through the Minister of Finance.

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“These practices can harm Canadian industries by undercutting Canadian prices, which undermines fair competition,” it said in a news release.

The investigation was launched after Tidewater Renewables Ltd. filed a complaint with the CBSA. Tidewater Renewables is a British Columbia-based renewable energy company.

Tidewater alleges that due to an increase in the volume of dumped and subsidized imports from the U.S., they lost market share and sales and saw price depression and reduced profitability, the CBSA said.

“We believe the investigation is an important step in levelling the unfair trade environment and offsetting unfair trade practices that have caused a flood of subsidized and dumped renewable diesel into Canada, significantly undermining the Canadian industry”, said Tidewater CEO Jeremy Baines.

The complaint and investigation are not related to the ongoing trade dispute with the U.S., the company said.

The Canadian International Trade Tribunal will investigate if imports are harming Canadian producers, and will issue a decision in early May. The CBSA will look into whether imports are being sold at unfair prices or are being subsidized. That preliminary decision will come in early June.

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Beijing in September launched a one-year investigation into canola imports from Canada after Ottawa imposed tariffs on Chinese-made electric vehicles, prompting importers fearing retaliatory anti-dumping duties to scale back purchases from Canada.

December shipments from Canada dropped 12 per cent from the same period the year before to 588,181 metric tons.

That was the first year-on-year decline in seven months and the smallest shipment volume since August.

More than half of Canada’s canola exports make their way to China, the world’s biggest oilseed importer.

China’s total canola imports rose in 2024 to 6.39 million tons compared to 5.49 million tons in 2023, customs data shows. Nearly all of that, at 6.13 million tons, arrived from Canada, amounting to $3.29 billion (C$4.71 billion).

Total Canadian canola exports have been strong since Aug. 1, with China accounting for over 75 per cent of shipments, Farm Credit Canada economists said.

“The export pace is running 10 weeks ahead of schedule,” they wrote in a  Jan. 15 report.

“Even if China slows down as expected, Canada will only need to export another 3 million tonnes of canola to reach Agriculture and Agri-Food Canada’s (AAFC’s) export target of 7.5 million tonnes in 2024/25. China’s anti-dumping probe is more likely to impact 2025/26 exports.”

—With files from Glacier FarmMedia

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The canola trade between the two countries is worth about $2 billion (C$2.81 billion) a year, but lower imports by China, the world’s biggest canola importer, could further squeeze ICE canola futures RSF5, which have dropped more than 10 per cent in the past month.

China has sufficient canola supply for the coming months, but Canadian oilseed farmers face a double whammy as its reduced buys coincide with import tariff threats by U.S. President-elect Donald Trump, including canola, traders and analysts said.

“China has yet to impose any duties but it already has a desired impact as buying of Canadian canola has come to a standstill,” said a trader with an international company that sells oilseeds to China.

“As of now, supply of canola in China is sufficient, with large imports in the past months.”

Oilseed buyers in China have been shipping Canadian canola at a record pace since September to take delivery of cargoes contracted before Beijing unveiled an anti-dumping investigation into Canadian imports of the oilseed, in retaliation to Ottawa’s tariffs on Chinese-made electric vehicles.

Buyers in China have booked to ship just about 250,000 metric tons of Canadian canola, also called rapeseed, for December shipment, two Singapore-based oilseed traders said, after taking around 500,000 tons in November and 863,000 tons in October.

“Buyers have been busy ensuring they ship the cargoes booked before Beijing’s announcement and before actual duties come into force,” the second trader said.

Canola is crushed to produce cooking oil and other products, including renewable fuels, and meal for animal feed.

China also has plentiful supplies of soybeans to bridge any shortfall in availability of canola, however, traders said.

“Some domestic rapeseed crushing plants have been forced to change to crush soybeans,” said Gan Quankun, director of agriculture products with trading company Zhangchiyoudao Asset Management in the commercial hub of Shanghai.

“Mainly because you (importers) are worried about policy risks, so you don’t dare to import rapeseed.”

While Chinese crushers are switching, retail demand for canola oil is likely to persist as many consumers prefer it to alternatives, despite its higher price.

China has enough stocks of canola to last until February, traders said, with buyers likely to switch to other origins, including Australia, in 2025.

China imported 5.074 million metric tons of canola between January and October this year, up from 4.27 million a year ago, customs data shows. That includes 4.84 million tons from Canada, 184,555 tons from Russia and 46,366 tons from Mongolia.

—Additional reporting by Ed White in Winnnipeg

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This is the first time the European Union has taken such action at the start of an investigation, rather than wait for it to result in trade measures against the bloc.

“The EU’s action was prompted by an emerging pattern of China initiating trade defence measures, based on questionable allegations and insufficient evidence, within a short period of time,” the commission said.

Proceedings at the WTO start with a mandatory period of 60 days for the parties to consult each other. The Commission said it would ask the WTO to set up an adjudicating panel if the consultations did not lead to a satisfactory solution.

WTO panels usually take more than a year to reach conclusions.

Later on Monday, China’s commerce ministry said it had received an EU request for consultations and expressed regret over the bloc’s WTO challenge.

Beijing’s investigation had been initiated “based on Chinese law and at the request of domestic industry,” the ministry said in a statement.

“China has a responsibility to protect the legitimate rights and interests of its domestic industries,” it added.

China initiated its anti-subsidy investigation on Aug. 21, targeting EU liquid milk, cream with a fat content above 10% and various types of cheeses.

The Commission said it was confident that EU dairy subsidy schemes are fully in line with international rules and not causing injury to China’s dairy sector.

The EU imposed provisional duties in July on electric vehicles built in China and EU members are expected to vote soon on final tariffs, which would apply for five years.

China also has ongoing anti-dumping investigations into EU brandy and pork. Earlier this month, the country announced a probe into Canadian canola after the Canadian government also announced tariffs on Chinese EVs.

—Reporting for Reuters by Philip Blenkinsop and Bart Meijer; Additional reporting by Beijing newsroom.

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Below are details on the probe into EU dairy imports and other industries which are under investigation.

Dairy

The anti-subsidy investigation on dairy announced by China’s commerce ministry on Wednesday will focus on various types of cheeses, milks and creams intended for human consumption.

It was prompted by a complaint submitted by the Dairy Association of China and the China Dairy Industry Association on July 29 on behalf of the domestic dairy industry.

China will examine 20 subsidy schemes from across the 27-strong bloc, specifically those from Austria, Belgium, Croatia, Czech Republic, Finland, Italy, Ireland, and Romania, it said in a statement.

The EU was China’s second-largest source of dairy products with at least 36 per cent of the total value of imports in 2023, behind only New Zealand, according to Chinese customs data.

The EU exported 1.7 billion euros ($1.84 billion) in dairy products to China in 2023, down from 2 billion in 2022, according to European Commission data.

Pork

The anti-dumping investigation announced in June by China’s commerce ministry is focusing on pork intended for human consumption, such as fresh, cold and frozen whole cuts, as well as pig intestines, bladders and stomachs.

It was prompted by a complaint submitted by the China Animal Husbandry Association on behalf of the domestic pork industry, the ministry said.

Pork suppliers from South America, the U.S. and Russia could be among those gaining market share if Beijing restricts imports from the European Union.

The EU accounts for more than half the roughly $6 billion (C$8.1 billion) worth of pork China imported in 2023, according to customs data, around a quarter of which was from Spain alone.

Second- and third-ranking, the Netherlands and Denmark last year exported to China pork products worth $620 million (C$839 million) and $550 million (C$742 million) respectively.

Brandy

China’s commerce ministry said on Thursday it would not impose provisional tariffs on brandy imported from the European Union, despite finding it had been sold in China below market prices.

Beijing said in January it was looking into whether EU brandy makers were selling their product in the country at below-market rates, weighing on sentiment for cognac producers, especially for French companies such as Remy and Pernod.

The French cognac industry makes up almost all of China’s EU brandy imports. French producers said they suspected the probe was linked to a broader trade row rather than the liquor markets.

Plastic

In May, Beijing launched an anti-dumping probe into POM copolymers, a type of engineering plastic, imported from the EU, U.S., Japan and Taiwan.

—Reporting for Reuters by Mei Mei Chu in Beijing, Nigel Hunt in London, Ozan Ergenay and Alessandro Parodi in Gdansk.

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Under the deal, the vast majority of Mexican tomato exports will be subject to border inspections. Still, the accord provides a measure of relief to Mexican President Andres Manuel Lopez Obrador in his dealings with the Trump administration.

In May, the U.S. Commerce Department imposed a 17.5 per cent tariff on Mexican tomatoes after the two sides failed to renew an earlier agreement that halted a U.S. anti-dumping probe. Since then, the two sides have held negotiations in search of a deal.

Calling the outcome of talks “good news” that kept the U.S. market open for tomato exporters, Marquez said on Twitter that the accord between the U.S. Commerce Department and Mexican producers had been reached shortly before midnight on Aug. 20.

A deal needed to be reached by Tuesday night to allow for a 30-day comment period before a Sept. 19 Commerce Department deadline for completing its anti-dumping investigation.

In a joint statement, several Mexican agricultural associations including the SPTN tomato producers group, said the accord included a “controversial proposal” to carry out border inspections on 92 per cent of exports to the U.S. for quality control purposes.

The deal also envisaged raising the reference price of specialty tomatoes, and an increase of 40 per cent in the price of organic tomatoes above that of conventional ones, it said.

Earlier this month, the Mexican government had rejected as “totally unacceptable” a proposal to subject all tomato exports from Mexico to border inspections.

Relations between president Lopez Obrador and his U.S. counterpart Donald Trump have been strained over trade and immigration. However, the origins of the tomato spat predate the New York real estate magnate’s time in the White House.

The current tomato agreement face its next so-called “sunset review” by September 2024, the statement added.

According to the Mexican government, there are some 1.5 million tomato growers in Mexico, and exports of the product to the United States are worth around US$2 billion annually.

The U.S. is also by far the largest buyer of Canadian tomato exports, accounting for about 98 per cent of Canada’s international sales of the crop.

The total value of Canada’s U.S.-bound exports of fresh and chilled tomatoes reached C$385.9 million in 2018 — down from C$410.9 million in 2017, but up from each of the previous four years, according to Statistics Canada.

— Reporting for Reuters by Dave Graham and Sharay Angulo. Includes files from Glacier FarmMedia Network staff.

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“The Department of Commerce remains committed to ensuring that American domestic industries are protected from unfair trading practices,” Secretary of Commerce Wilbur Ross said in a statement. “We remain optimistic that there will be a negotiated solution.”

The tariff will go into effect in about a week.

Mexican Deputy Economy Minister Luz Maria de la Mora said Monday that U.S. consumers will face financial impacts after they could not reach agreement.

“We’re very disappointed but the good news is that negotiations continue, looking for a solution. And we hope that in the coming weeks we can in fact reach an agreement,” de la Mora said.

Mexico exports around US$2 billion worth of tomatoes to the U.S. annually, according to de la Mora.

Mexican imports account for just over half of the U.S. tomato market, according to the Florida Tomato Exchange.

Ross said the U.S. will refund any tariff deposits if a new deal is reached or if the U.S. International Trade Commission determines there is no injury based on its own independent investigation.

Ross said in early February that the U.S. would resume an anti-dumping investigation into Mexican tomatoes, withdrawing from a so-called suspension agreement that halted the anti-dumping case as long as Mexican producers sold their tomatoes above a pre-determined price. U.S. growers and lawmakers say that deal has failed.

A trade war over tomatoes has been averted twice since the 1990s, most recently in the 2013 deal that put a price floor on Mexican tomatoes sold in the U.S. while barring U.S. growers from pursuing anti-dumping charges against Mexican exporters.

Fruit and vegetable growers in the southeastern U.S. had persuaded the Trump administration to seek the ability to impose seasonal anti-dumping duties against Mexican produce in negotiations to update the North American Free Trade Agreement. But the demand was withdrawn in the final talks over the U.S.-Mexico-Canada trade deal reached last October.

A month later, the Florida Tomato Exchange, which represents growers in the state, petitioned the Commerce Department to terminate the 2013 tomato pact. It argued that the agreement could not be enforced and contained too many loopholes through which Mexican growers could dump tomatoes in the U.S. market.

The U.S. is also by far the largest buyer of Canadian tomato exports, accounting for about 98 per cent of Canada’s international sales of the crop.

The total value of Canada’s U.S.-bound exports of fresh and chilled tomatoes reached C$385.9 million in 2018 — down from C$410.9 million in 2017, but up from each of the previous four years, according to Statistics Canada.

— David Shepardson is a Reuters reporter covering U.S. trade and transportation issues from Washington. Includes files from Glacier FarmMedia Network staff.

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