After a bruising year of tariffs, trade disruptions and policy uncertainty, the outlook for Canada’s canola sector is turning cautiously more optimistic heading into 2026, even as the industry remains exposed to geopolitical risk and shifting export demand, says Export Development Canada.
Canada’s canola trade was hit hard in 2025 after China reimposed major barriers on Canadian agricultural goods. On March 20, 2025, China placed 100% tariffs on Canadian canola oil and meal, along with peas, and later added a 75.8% anti-dumping tariff on Canadian canola seed effective Aug. 14. The measures sharply disrupted trade with one of Canada’s most important customers and sent Saskatchewan benchmark canola prices down nearly 9%.
The blow was especially severe because it came just as trade conditions had begun to recover from earlier tensions, wrote Prince Owusu, Senior Economist, Economic and Political Intelligence Centre, in the EDC TradeInsights article.
Canadian canola product exports to China had climbed to a record 7.9 million tonnes in 2024, but the renewed tariffs reversed that momentum. In 2025, Canadian canola exports to China fell 62%, while shipments to the U.S. declined 9%, hurt in part by uncertainty surrounding U.S. biofuel policy and weaker demand for renewable diesel feedstocks. Total Canadian canola export volumes fell 7.4% for the year.
Still, the sector showed signs of resilience. Exporters redirected product to Europe, Japan and emerging Asian markets, driving shipments to the rest of the world up nearly 161%. That increase was not large enough to fully replace lost Chinese and U.S. demand, but it helped cushion the overall damage and underscored how the industry has adapted since China’s earlier canola dispute in 2019.
Now, there are signs the worst may be easing. Following Prime Minister Mark Carney’s trip to China in early 2026, the two countries reached an agreement that reduced Chinese tariffs on Canadian canola seed to about 15% as of March 1, 2026, while also providing exemptions in 2026 for Canadian canola meal and some other agricultural products.
At the same time, proposed changes to U.S. clean fuel tax credits could reopen demand for Canadian feedstocks by restoring eligibility for Canadian producers and explicitly including North American-grown inputs such as canola. If finalized, those changes would support medium-term demand not only for canola, but also other North American oilseeds and grains.
The result is a canola market entering the new season with cautious optimism. Trade shocks have again exposed the sector’s vulnerability, but improving access to China, expanding diversification efforts and a potentially friendlier U.S. biofuel framework are giving producers a somewhat firmer footing for 2026.
Read the entire EDC article here:
https://www.edc.ca/en/article/china-tariffs-canola-exports.html
