CHARLEBOIS: Farmers pay the price for Ottawa’s EV obsession

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Canada has launched a trade war with China, but few in Ottawa are willing to acknowledge the consequences.

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Unlike the United States that often uses tariffs as bargaining chips, China has adopted a more calculated and punitive approach. When Beijing retaliates, it targets industries that are economically and symbolically, ensuring maximum pressure on its opponents.

As far as Canada is concerned, this means agricultural exports, especially canola oil, known globally as “PetroChina” and Atlantic lobster, both of which are now collateral damage in this escalating dispute.

The consequences have been felt.

Starting March 20, Canadian cereal farmers, pig producers and seafood harvesters will face 100% tariffs when exporting to China, a key market for these sectors. Rapeseed, which generated $3.72 billion in exports in recent years, is now under anti-dumping investigations, while Rapeseed Oil, a major treatment product, is being hit by overpriced tariffs. Pork exports once flourished, and as China strengthens import restrictions, pork exports will decrease. The billion-dollar seafood industry, led by lobsters and crabs, now faces similar uncertainty.

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The crisis was triggered by Ottawa’s decision to impose tariffs on Chinese electric vehicles and forts in October 2024, reflecting the attempt by then-US Prime Minister Justin Trudeau to be consistent with then-U.S. President Joe Biden, aiming to prevent North American manufacturing from influx of cheap Chinese imports.

Now both leaders are gone, Prime Minister Mark Carney has made it clear that he has no intention of reversing the route.

China’s revenge follows a familiar pattern. When Huawei executive Meng Wanzhou was arrested in Vancouver in 2018 at the request of the United States, Beijing did not retaliate against Washington – it hunted down Canadian farmers and restricted major agricultural exports.

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The same script is being used now, however, Ottawa seems to have forgotten or been reluctant to admit how much damage it has done to its own producers.

At the heart of the conflict is Canada’s high-risk bet on electric vehicles and battery manufacturing. The federal government has pledged to develop nearly $50 billion to develop the industry, funding Stellantis and LG’s battery plants in Windsor, Volkswagen’s Gigafactory in St. Thomas and Northvolt’s factory in Quebec – despite Northvolt’s financial struggle and reports that its parent company’s affiliates are in bankruptcy.

As part of Canada’s strategy to become a global battery hub, Ford and other automakers have added billions of dollars.

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Although these subsidies are designed to create jobs and secure supply chains, they pose enormous financial and economic risks. There is no guarantee that Canada’s electric vehicle industry will be globally competitive, or that these government-backed projects will be provided in promised returns.

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Ottawa has basically chosen to apply the supply management style approach to emerging industries – limiting competition, inflated costs and betting taxpayers’ funds on industries that are far from the facts. As history has shown, when market management is managed in large quantities, consumers end up getting higher prices, lower quality and fewer choices.

Ottawa sacrificed the interests of Canadian farmers and seafood harvesters while prioritizing manufacturing work in Ontario and Quebec. But the federal government did not recognize this trade-off or provide support, but remained silent to a large extent.

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The reaction of new agriculture minister Kody Blois is particularly disturbing. The 100% tariff on key exports is a major blow as farmers get stuck due to rising costs and falling profit margins. If Minister Blois does not act quickly to defend Canada’s agricultural sector, farmers and seafood harvesters will be left behind to bear the full weight of Ottawa’s geopolitical gambling.

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Canada’s handling of this trade war has always been reckless. Instead of mitigating risks, the government started in an untested industry while returning to the agricultural sector that has long been the backbone of Canada’s economy.

If Minister Blois and the Carney government fail to intervene, the economic consequences for Canadian farmers and seafood producers will be serious. Ottawa may be willing to do the gambling, but it will eventually be the agriculture sector. It’s a mess.

– Dr. Sylvain Charlebois is director of the Agriculture and Food Analysis Laboratory at Dalhousie University and co-host of the Food Professor Podcast

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