Canada Eases Some Tariffs on US and China in Bid to Calm Trade Tensions

Recently, Manitoba Premier Wab Kinew wrote to Canadian Prime Minister Mark Carney urging the federal government to lift the 100% tariff imposed on Chinese electric vehicles.

Calling for the removal of 100% tariffs on Chinese imports, in his letter, Kinew stated that Canada's imposition of tariffs on Chinese electric vehicles has triggered a bilateral trade war, with particularly severe repercussions for Western Canada. China's countermeasures against Canada have led to a significant decline in Canadian canola prices and severely impacted the pork production sector.

Kinew asserted that Canada-China relations are at a critical juncture, urging the Carney administration to seize this opportunity. Previously, Saskatchewan Premier Scott Moe also publicly expressed his desire to eliminate tariffs on Chinese electric vehicles. Data indicates that Saskatchewan's rapeseed exports to China in August fell by 76% year-on-year.

Tariff reductions on certain US-China steel and aluminium products

Separately, a Reuters report on 20 October cited a Canadian government document revealing that Canada has implemented tariff reductions on certain steel and aluminium products imported from the United States and China to assist Canadian businesses impacted by the trade war.

Since the latter half of last year, Canada has successively imposed tariffs on a series of steel and aluminium products imported from both the US and China. The measures against the US were retaliatory in response to American tariffs on Canadian steel and aluminium products, while those against China were seen as following the US trade initiative.

Canada's tariff policy swiftly provoked a Chinese countermeasure. Beijing launched an anti-dumping investigation into Canadian canola imports, imposing provisional anti-dumping measures in August this year that levied a 75.8% cash deposit on Canadian companies. Additionally, China imposed tariffs on Canadian canola oil, aquatic products, and pork. This has subjected the Canadian government to pressure from its domestic agricultural sector.

Canada's economy has come under significant strain from tariffs imposed by both the US and China on its products. In an effort to reach an agreement with the Trump administration, Carney has already withdrawn many of the retaliatory tariffs imposed by his predecessor on American goods.

Regarding the US, Canada has recently indicated it will not impose further retaliatory tariffs. Last week, Carney stated, Canada is working to secure an agreement that provides relief for sectors such as aluminium, steel and energy, now is the time for negotiations.

Easing trade tensions with the US faces domestic industry resistance. The Canadian Broadcasting Corporation reported that Catherine Cobden, Chief Executive and President of the Canadian Steel Producers Association, stated: We are disappointed to see US producers granted broad tariff exemptions for two months while we remain barred from their market.

Economic outlook may weaken over next six months

Recently, Canadian Prime Minister Carney dispatched officials to China for exploratory talks, while Foreign Minister Anita Anand visited China last week. Canadian media suggest these moves aim to repair relations with Beijing.

Canada's Globe and Mail cited expert analysis suggesting that rebuilding ties with China will prove challenging. For success, Carney must persuade Beijing to lift measures on Canadian canola imports, though there is currently no indication of easing restrictions on Chinese electric vehicle imports.

As the trade conflict persists, pessimism over economic growth is rising domestically. Bloomberg reported on the 20th that over half of Canadians believe the economy will weaken over the next six months. Canadian policymakers stated they had spoken with exporters in the steel and aluminium sectors, who reported ‘particularly weak prospects’.

These companies also indicated that tariffs have led to significant job losses. One Canadian netizen commented beneath the relevant news article: Compared to the US and China, Canada's consumer base is smaller. The reality is that Canada holds little bargaining power in tariff wars with these nations.