China ’s 75.8 per cent preliminary tariff on Canadian canola seed is yet another reminder of the importance of diversification and strategic policy making amidst a volatile market and geopolitical instability.

With the industry’s recent steps to diversify both products and markets, canola is a case study for how other industries could strategically plan for geopolitical risk across the supply chain and in government programs and policy.

This latest tariff comes after a year-long anti-dumping investigation launched by China following its accusation that Canada gives its farmers an unfair market advantage through subsidies and other preferential policies. The move is another blow to canola farmers, who were hit earlier this year with heavy tariffs by China on canola oil and meal exports.

Although China has pinned this latest tariff to its anti-dumping investigation, scheduled to wrap up in September, the context makes the political overtones hard to miss. Canada had already placed a 100 per cent tariff on electric vehicles made in China, taking the action just three months after the

United States imposed the same. China’s response? Hit one of Western Canada’s most valuable agricultural assets.

This is not the first time China has used canola as a proxy for another issue.

Canola seed exports dropped to 19 per cent in 2019 from 48 per cent in 2018 after China banned seed exports from agrifood giants Richardson International Ltd. and Viterra Ltd. China claimed the move was over quality-control issues. In Canada, we saw another retaliation for the arrest of Huawei Corp. chief financial officer Meng Wanzhou at the behest of the U.S.

Although billions were lost because of the ban, the situation underscored the importance of domestic crushing capacity at a time when canola companies were initiating crush plant projects. In 2019, an average of 810,000 tonnes of seed was crushed, and, so far in 2025, an average of 921,000 tonnes has been crushed, an increase of 15 per cent.

Increased crush capacity allowed Canada to shift a portion of its canola exports away from raw seed toward oil and meal, most of which was sold to U.S. markets. Lately, however, even oil exports to our southern neighbour have been less consistent, with sales to other countries such as Mexico, South Korea, Malaysia and Colombia helping to cushion some of the loss.

The U.S. political culture has shifted, some say permanently, which means that regardless of who wins the 2028 presidential election, protectionism should be expected. And China’s willingness to use canola and agriculture as leverage against Canadian actions it perceives as harmful is not a passing phase; it is reality.

This teeter-totter between the U.S. and China creates instability for producers and for government programs that support them and all hands are needed to find long-term solutions. Adding salt to the wound, efforts to increase domestic capacity have been hampered. Viterra’s recent merger with U.S.-headquartered Bunge Global SA meant there was a reassessment of its plans to build the world’s largest integrated crush facility in Regina.

Two other proposed crush plant builds have also been shelved, one in 2022 and the other in early 2025, primarily due to the U.S. focusing on domestic biofuels policy. With the European Union’s call for renewable energy and a lower-than-estimated rapeseed harvest, the EU could be an alternative market for Canadian biofuels.

The canola story is a canary in a coal mine. Trade diversification isn’t an aspirational talking point for a politician. A toolkit for resiliency includes specific actions Ottawa and industry can take now to stabilize market volatility through diversification and expanding domestic processing capacity.

Trade agreements, particularly with Association of Southeast Asian Nations (ASEAN) countries and the EU, are underutilized due to the time and effort it takes to build new relationships and adapt to a new regulatory environment. There are trade commissioners to support market entry, but producers and exporters could benefit from commodity-specific strategic plans that consider both market growth and geopolitical risk factors.

Ottawa should create stable incentives such as tax credits, loan guarantees and a predictable investment climate for crushing plants and renewable fuel facilities. Companies won’t risk billions if policies shift with every election. Building here is not just an agricultural strategy. It’s an economic security strategy.

Programs such as AgriStability should evolve from crisis cushions into tools that reward resilience. Tie payouts to diversification plans or value-added investment. Explore industry-government insurance pools that spread costs while reducing pressure on public budgets. Let’s pay for solutions, not repeat bailouts.

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Canada’s ability to diversify markets depends on how fast and efficiently we can get goods to them. That means investing in rail, ports and inland terminals and streamlining regulatory approvals. Infrastructure bottlenecks aren’t just economic irritants; they are national security vulnerabilities. Farmers feed markets