Canadian exporters had already begun diversifying canola trade well before China levied punitive tariffs last summer, a move that has now softened the blow as Ottawa and Beijing strike a partial trade truce set to take effect March 1, 2026, according to an RBC analysis released earlier this week.
Under the truce, China will remove 25% tariffs on Canadian seafood, peas and canola meal, while sharply reducing tariffs on canola seed from 75.8% to 15%. In return, Canada will lower tariffs on imports of Chinese electric vehicles from 100% to 6.1%, allowing up to 49,000 EVs into the country this year — equivalent to less than 3% of total vehicle registrations.
The deal offers near-term relief to hard-hit agricultural sectors, particularly on the Prairies and along the coasts, said RBC economist Salim Zanzana, who authored the analysis.
Chinese tariffs imposed in mid-August 2025 had an immediate impact on canola seed exports, which fell nearly to zero in September and October and were down 60% year-to-date compared with 2024. Overall, Canadian canola exports declined about 13% from January to October 2025, while farm cash receipts fell 9% despite record production.
Yet the data show exporters were already adjusting, Zanana wrote. Shipments of canola seed to countries other than the U.S. and China more than doubled over the same period, partially offsetting losses. The share of Canadian canola exports going to China had dropped from nearly 80% in September 2024 to under 50% following Canada’s earlier tariffs on Chinese EVs and metals, suggesting marketers were anticipating heightened trade risks.
Other tariffed goods followed a similar pattern. Exports of seafood and pork to China fell 31% and 19%, respectively, in 2025 to October, but much of that volume was redirected to alternative markets. Not all export weakness stemmed from China, however, as roughly one-third of the decline in canola product exports reflected lower shipments of canola oil to U.S. buyers.
The tariff rollback is expected to reduce downside risks for provinces most exposed to Chinese demand, including Saskatchewan, Alberta, Manitoba, British Columbia and Nova Scotia.
Still, uncertainty remains. A 15% tariff on canola seed may continue to limit competitiveness in global markets, and the relief on several products is only guaranteed through the end of 2026, Zanzana added.
The full analysis can be found here:
Canada-China truce to bring relief for agricultural exports with caveats - RBC Economics
