By all accounts, growing canola requires careful management: the small, shallow-planted seeds are sensitive to moisture, extreme temperatures and competition from weeds.
But skillfully managing the elements turns out to be nothing compared to the perfect diplomatic balance that is required to get the product to customers.
The U.S. is the biggest market for Canadian canola; China is the second biggest.
The Americans have deputized Canada in their trade war with Beijing, encouraging Ottawa in 2024 to
follow their lead with 100 per cent tariffs on Chinese electric vehicles
. But the Trump administration has since become an erratic partner, and the Carney government is now seeking to reduce dependence on the U.S. market.
Meanwhile, the
Chinese have responded to the EV tariff
with a 76 per cent tariff on Canadian canola.
The conundrum for Prime Minister Mark Carney is how to get out from under China’s canola duties without alienating Trump.
A report by an
expert group on Canada-U.S. relations
that included former national security adviser Vincent Rigby, ex-defence minister Perrin Beatty and Retired Vice-Admiral Mark Norman among its authors, recommended that Canada should adopt a policy of “selective engagement” to maintain its dealing with China.
“Conspicuous independence in Canada’s China policy risks retaliation from Washington; too much alignment (with the U.S.) risks compromising Canadian sovereignty and efforts to diversify our global economic partnerships,” the authors concluded, somewhat unhelpfully.
Carney could be forgiven for expressing exasperation at this kind of “on the one hand, on the other” brand of analysis.
Where is the sweet spot of what might be called “inconspicuous independence”?
The report doesn’t say but Carney seems to be groping his way toward some kind of deal with Beijing.
Since a call with China’s premier, Li Qiang, in June, there has been a reset in relations, even if the Canadian side is aware that, in the words of the expert report, it is dealing with “a superpower it can neither fully trust nor afford to ignore.”
On Friday, Carney announced that Canada’s EV mandate, which required 20 per cent of all cars sold next year to be zero emissions vehicles or plug-in hybrids,
is being suspended while the government conducts a 60-day review
, to “advance new options to bring more affordable electric vehicles to Canada.”
Since much of the announcement was about protecting the agriculture and seafood industries from Chinese tariffs, reporters wondered whether the government is considering lifting the tariff on EVs in exchange for access for canola.
Carney responded that Canada has begun “intensive engagement” with China, primarily on canola and seafood, “but I’m sure those discussions will broaden out.”
The attraction for Carney is that lifting the EV tariff would help him lower transportation emissions. It would also be well received in China, which imported $4 billion worth of Canadian canola before it imposed tariffs.
The Chinese are keen to take advantage of the Trump-induced crisis by presenting themselves as predictable, dependable trading partners — as if the years of intellectual property theft, arbitrary detentions and wolf-warrior diplomacy didn’t happen.
The removal of the EV tariff has been backed by Saskatchewan Premier Scott Moe,
with Carney’s parliamentary secretary, Kody Blais, to talk canola. Alberta Premier Danielle Smith has also called for the duty to be scrapped, saying it is possible to keep the two relationships — with the U.S. and with China — separate.
That hypothesis remains unproven. The Americans could see the importation of cheap Chinese EVs into Canada as a backdoor into the U.S. market and impose their own tariff on canola.
There’s no doubt about the existential threat to the auto industry on both sides of the border posed by the heavily subsidized Chinese vehicles like the BYD Seagull, which retails for US$7,800 in China.
Consumer subsidies in Canada and the U.S. for electric vehicles have expired, or are about to end. The automakers remain convinced there is demand for electric vehicles, but they know they need to be cheaper.
Ford CEO Jim Farley said the company is facing its “Model T moment” with its new “universal electric vehicle platform.” It plans to release a mid-sized EV pickup truck in 2027 that would retail for around US$30,000.
Other North American automakers are following suit. Tesla is looking at cheaper Model Y and GM is bringing back the Chevy Bolt, another US$30,000 model.
But even Farley acknowledges the Chinese vehicles have “far superior in-vehicle technology” from facial recognition to AI companions and other connectivity frills that likely mean the Chinese government is coming along for the ride.
Overcapacity in China means they are priced far below global competitors at a time when Trump’s tariffs are driving up prices (Cox Automotive said last month that it sees vehicle prices rising four to eight per cent in 2025).
The Canadian automakers got what they wanted with the suspension of the EV mandate, not to mention the announcement of a $5-billion strategic response fund to help businesses adapt to the new trading environment.
But opening the market to the Chinese could be an unintended coup de grâce.
It is all very well for experts (and pundits) to suggest the prime minister protect Canada’s sovereignty and diversify its trade relations at the same time.
But Carney has to determine whether he has the political space to pursue a non-aligned policy. It could be one of the consequential decisions of his time in office.
National Post
