China has escalated its trade dispute with Canada by imposing provisional anti-dumping duties of 75.8 percent on Canadian canola imports, effective immediately.

This decision follows a preliminary ruling that Canadian canola was being sold at unfairly low prices, harming China's domestic oilseed processors, and is linked to significant government subsidies in Canada's rapeseed sector.

The investigation into Canadian canola was initiated based on claims that it was sold below domestic prices, which the Canola Council of Canada disputes.

In response to the tariff announcement, canola futures dropped 6.5 percent to a four-month low, reflecting market shock and uncertainty about the future of Canadian exports to China.

As the world's largest importer of canola, China sources nearly all its canola supplies from Canada, raising concerns about the viability of these exports under the new duties.

Analysts predict that these steep duties could effectively halt Canadian canola imports, increasing pressure on the Canadian government to resolve trade tensions with China.

Alternative suppliers, particularly Australia, are expected to benefit from the disruption in Canadian exports, highlighting the competitive nature of global supply chains.

The imposition of duties is anticipated to create opportunities for Australia to regain market access, which had been restricted since 2020 due to plant disease regulations.

This latest move by China follows a history of trade disputes, including a previous halt of canola shipments in 2019, and comes amidst ongoing tensions with the United States.

The anti-dumping measures reflect a broader trend of increasing crop trade tensions globally, with countries tightening trade rules, particularly for goods tied to national security.

The Canadian government has defended its actions as necessary to protect Canadian industries and workers from unfair advantages held by countries like China.

The final decision on the duties is expected in September 2025, with the possibility of extending the investigation, which could alter the current provisional rate.