China imposes 100% reciprocal tariffs on Canada

China is firing back at Canada with 100% tariffs on key agricultural imports, escalating a trade war that has already drawn in the U.S. and the European Union.

Beijing announced the new tariffs on Saturday, saying they were a direct response to Ottawa’s import duties on Chinese electric vehicles, steel, and aluminum. The new tariffs will take effect March 20, according to a statement from China’s Customs Tariff Commission of the State Council.

China is hitting Canadian rapeseed oil, oil cakes, and peas with a 100% tariff, while aquatic products and pork will face a 25% levy.

The move comes months after Canada imposed its own restrictions on Chinese imports, with Beijing calling Ottawa’s actions a “discriminatory measure” that violates World Trade Organization (WTO) rules and damages China-Canada economic relations.

Canada’s tariffs on Chinese electric vehicles, steel, and aluminum didn’t come out of nowhere. On October 1, Ottawa slapped a 100% tariff on Chinese-made EVs, following similar actions by the U.S. and European Union, which accused China of unfair competition in the auto industry.

Just two weeks later, on October 15, Canada raised the stakes by placing a 25% tariff on steel and aluminum products from China. Beijing was quick to respond.

In a statement, Chinese customs officials said, “Canada’s unilateral imposition of tariffs disregards objective facts and WTO rules… and seriously infringes on China’s legitimate rights and interests.”

Canada takes its fight to the WTO

China isn’t the only country in this fight. Canada has also turned to the WTO over what it calls “unjustified tariffs” from the United States. On Wednesday, Canada’s ambassador to the WTO, Nadia Theodore, announced that Ottawa had officially requested consultations.

“The U.S. decision leaves us with no choice but to respond to protect Canadian interests,” Theodore said in a statement posted on LinkedIn. A WTO spokesperson later confirmed that Canada’s request had been received.

Meanwhile, Donald Trump is pressing forward with his own tariffs on Canada and Mexico. The U.S. President approved a 25% tariff on Canadian and Mexican imports, which took effect on Tuesday, targeting over $2.2 trillion in trade.

According to Trump, these tariffs were put in place because Canada, Mexico, and China have not done enough to stop the flow of fentanyl and its precursor chemicals into the United States. Canadian Prime Minister Justin Trudeau fired back immediately, calling Trump’s move “a very dumb thing to do.”

Trudeau responded by announcing 25% tariffs on C$30 billion worth of U.S. imports. He also warned that Canada is ready to target another C$125 billion in goods within 21 days if necessary.

China’s trade takes a major hit

The impact of these escalating tariffs is already visible in China’s economy. According to official data, China’s total trade value dropped 2.4% in the first two months of the year. The biggest problem? Exports aren’t growing fast enough, and imports are falling.

Between January and February, China’s exports grew by only 2.3%, well below the 5% increase analysts had expected. Imports fell 8.4%, the sharpest drop since July 2023.

Some of this was expected. Chinese companies have been rushing to export goods before new tariffs kick in, knowing that Trump’s administration isn’t done imposing restrictions.

His first 10% tariff hike on Chinese goods took effect on February 4, followed by another 10% increase in March, raising the total tariff burden on Chinese exports to 20%.

Beijing has retaliated by slapping tariffs on select U.S. goods, including energy and agricultural products, while restricting exports of critical minerals that American industries depend on.

Gary Ng, senior economist at Natixis, said, “As firms expect further mutual tariffs between the U.S. and China, there is still some demand for front-loading.” He added that because of last year’s high trade numbers and rising tariffs, China’s foreign trade will likely stay under pressure for months.

Global trade is feeling the pressure

This trade war isn’t just hurting China. The latest data shows that trade between China and some of its biggest partners is shrinking.

Imports from the European Union dropped 5.6%, while exports to the EU grew by just 0.6%. Trade with Japan and South Korea is also falling, as imports continue to decline.

One bright spot for China is trade with ASEAN countries. Chinese exports to the region grew 5.7%, though imports still fell 1.3%. Steel and rare earth exports declined 3.9% and 0.4%, respectively, while high-tech products and ship exports saw moderate growth.

With trade slowing, China’s leadership is focusing on stabilizing the economy. Officials have set a 5% GDP growth target for 2025, while also adjusting their inflation target to the lowest level in decades.

To boost consumer spending, Beijing is expanding its fiscal stimulus efforts. In January, the government launched a trade-in subsidy program for electronics, covering smartphones and home appliances. Chinese leaders also approved an additional 300 billion yuan in ultra-long special treasury bonds to support consumer spending.

Bruce Pang, adjunct associate professor at the Chinese University of Hong Kong, said that Beijing must step up efforts to boost domestic demand if it hopes to achieve stable growth.

The next phase of this trade war depends on how Trump plays his hand. The U.S. is currently investigating whether China has complied with a 2020 trade agreement, and the findings are expected by April 1. If Trump decides that China hasn’t lived up to the deal, more tariffs could be on the way.

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