Canola, Cars, and Climate: Canada’s Latest Trade Crisis with China

In the latest round of trade tensions between Ottawa and Beijing, China has slapped hefty tariffs on Canadian canola oil. Officially, this move is retaliation against Canada’s resistance to Chinese electric vehicles (EVs) flooding the market. But the consequences go far beyond trade spats—it’s a direct strike at two industries Canada holds dear: agriculture and auto manufacturing.

The fallout is already sparking headaches for Canadian farmers, who rely on China as a key export market. At the same time, the Liberals are now facing a policy crisis of their own making: how to balance their lofty climate goals with the economic realities of keeping both farmers and autoworkers afloat.

Canada is the world’s largest exporter of canola oil, a product that has become a staple in global cooking and food manufacturing. For years, China has been one of the biggest buyers. That demand has fueled rural economies across the Prairies, where canola is a lifeline crop.

Now, with tariffs making Canadian canola more expensive, Beijing is signaling it will look elsewhere—perhaps to Europe, Southeast Asia, or even domestic alternatives. That leaves Canadian farmers with surplus product, falling prices, and shrinking revenue. For rural communities already struggling with inflation, the impact could be devastating.

In many ways, farmers are collateral damage in a trade war that has nothing to do with them. Their livelihoods are now directly tied to Ottawa’s decision on whether to let Chinese EVs compete freely in the Canadian market.

Here lies the real dilemma. The Liberals have promised that by 2035, no new internal combustion engine (ICE) cars will be sold in Canada. It’s an ambitious target meant to show global leadership on climate change. On paper, the timing of cheap Chinese EVs should be perfect—just as Canada phases out gas-powered vehicles, China can deliver affordable alternatives for middle-class consumers.

But there’s a catch: Canada still has a domestic auto industry. Ontario’s assembly plants—long a symbol of Canadian industrial strength—employ tens of thousands and anchor entire communities. Letting Chinese EVs pour into the market unchecked would undercut that industry, potentially hollowing out jobs in auto towns from Windsor to Oshawa.

So, while Chinese EVs might help the Liberals meet their climate targets, they would also threaten one of the country’s largest and most politically sensitive sectors.

This is the uncomfortable choice the Liberals now face. Do they prioritize economic prosperity—protecting farmers and autoworkers—or do they double down on what critics increasingly call their “virtue signaling” obsession with climate change?

If they stand firm against Chinese EV imports, Canadian consumers will face higher prices for electric cars, delaying the transition away from gas-powered vehicles. That means falling short of their 2035 target, a major blow to their environmental agenda.

If they allow Chinese EVs to flood the market, the environmental goal might be achieved—but at the expense of Canadian industry. Farmers lose their key export market, and auto workers face foreign competition they cannot possibly match.

The politics are messy. Prairie farmers—already skeptical of the Liberals—will view canola tariffs as another example of Ottawa sacrificing their interests. Meanwhile, Ontario, a province the Liberals desperately need to win elections, could erupt if auto jobs are threatened.

And the climate file is no safer. Environmental activists will demand that Ottawa fast-track EV adoption, even if that means letting China dominate the market. But this risks further accusations that the Liberals care more about virtue signaling on the global stage than about the economic well-being of Canadian citizens.

It’s no coincidence that China targeted canola. The commodity is both symbolic and strategic. By hitting Canadian farmers, Beijing is betting Ottawa will feel pressure to soften its stance on EVs. After all, China doesn’t need Canadian canola as much as Canadian farmers need Chinese buyers. The balance of power in this trade spat heavily favors Beijing.

At the same time, China is positioning itself as the world’s EV powerhouse. By muscling into Western markets, it not only sells cars—it sets the global standard for the industry. For Canada, resisting that tide will be difficult without significant subsidies or trade barriers, both of which carry their own costs.

The canola tariffs are more than a trade skirmish—they’re a symptom of a deeper dilemma. Canada cannot pretend to pursue ambitious climate goals without grappling with the economic costs. The Liberals’ dream of phasing out ICE cars by 2035 collides head-on with the reality of cheap Chinese EVs and the fragility of Canada’s export-dependent economy.

At some point, Ottawa will have to decide: is it willing to sacrifice farmers and autoworkers at the altar of climate virtue, or is economic prosperity still the priority? For Canadians watching their livelihoods hang in the balance, the answer cannot come soon enough.