Core Insights - The Canadian canola industry, once a source of pride with exports reaching CAD 26 billion, is facing a severe crisis due to trade policy decisions, leading to a dramatic drop in exports to China, nearly to zero [2][3] Trade Policy Impact - The crisis began in 2024 when the Canadian government imposed high tariffs on Chinese electric vehicles and steel, prompting China to retaliate with a 100% punitive tariff on Canadian canola oil and meal in March 2025 [3] - By August 2025, China escalated the trade dispute by implementing anti-dumping measures, effectively closing the market for Canadian canola [3] Market Reaction - Chinese buyers, who previously accounted for over 90% of Canadian canola exports, abruptly exited the market, causing exports to plummet from 1.2 million tons to 360,000 tons, a 70% decrease [4] Industry Consequences - Farmers in Saskatchewan are facing unsold crops and potential spoilage, with processing plants in Alberta halting operations, threatening over 5,000 jobs [6] - The cumulative loss for the canola industry since March 2025 has reached approximately RMB 800 million, with a recent two-week loss of about RMB 140 million [6] Order Diversification and New Opportunities - Despite the crisis, China has not faced a supply shortage; instead, domestic companies like COFCO and Yihai Kerry have diversified their procurement, significantly increasing imports from non-Canadian sources [9] - By mid-August 2025, China signed a deal with Australia for 50,000 tons of canola, with imports from non-Canadian sources rising to 43%, a fivefold increase year-on-year [9] Domestic Pressure and Government Response - The Canadian government is under immense pressure, with Prime Minister Carney announcing a diplomatic mission to China to seek solutions [10] - The cumulative loss in the canola industry has reached CAD 2.3 billion, with job losses totaling 12,000 [10] Market Dynamics and Lessons Learned - Analysts emphasize that without the Chinese market, the crisis for the Canadian canola industry will be difficult to resolve, as demand from other markets is insufficient [14] - The canola futures prices have been in a prolonged decline, marking the longest drop since the 2008 financial crisis, driven by sudden trade policy changes rather than supply-demand shifts [14] China's Strategic Response - In contrast to Canada's turmoil, China has responded calmly and strategically, adhering to WTO rules in its trade measures against Canada [16] - China's market behavior has demonstrated its ability to adjust supply chains and seek alternatives, highlighting the importance of market flexibility and the reality that no supplier can dominate indefinitely [16]