CHARLEBOIS: Farmers pay the price for Ottawa’s EV obsession

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Canada started a trade war with China, yet few in Ottawa seem willing to acknowledge the consequences.

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Unlike the United States, which often imposes tariffs as a bargaining chip only to later negotiate, China takes a far more calculated and punitive approach. When Beijing retaliates, it targets industries with economic and symbolic significance, ensuring maximum pressure on its adversary.

In Canada’s case, that means agricultural exports – particularly canola, known globally as “Canada oil,” and Atlantic lobster, both of which have now become collateral damage in this escalating dispute.

The fallout is already being felt.

Starting March 20, Canadian grain farmers, hog producers, and seafood harvesters will face 100% tariffs when exporting to China, a critical market for these sectors. Canola, which generated $3.72 billion in exports in recent years, is now under anti-dumping investigations, while rapeseed oil – a major processed product – is being hit with prohibitive tariffs. Pork exports, once thriving, have dwindled as China tightens import restrictions. And the billion-dollar seafood industry, led by lobster and crab, is now facing similar uncertainty.

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This crisis was set in motion by Ottawa’s decision in October 2024 to impose tariffs on Chinese electric vehicles and batteries, mirroring a move by the U.S. Then-prime minister Justin Trudeau sought to align with then-U.S. president Joe Biden, aiming to shield North American manufacturing from an influx of cheap Chinese imports.

Now, with both leaders gone, Prime Minister Mark Carney has made it clear he has no intention of reversing course.

China’s retaliation follows a familiar pattern. When Huawei executive Meng Wanzhou was arrested in Vancouver in 2018 at the request of the U.S., Beijing didn’t retaliate against Washington – it went after Canadian farmers, restricting key agricultural exports.

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The same playbook is being used now, and yet, Ottawa appears either oblivious or unwilling to acknowledge how much damage this is causing to its own producers.

At the core of this conflict is Canada’s high-stakes bet on EVs and battery manufacturing. The federal government has committed nearly $50 billion to develop the sector, funding projects like Stellantis and LG’s battery plant in Windsor, Volkswagen’s gigafactory in St. Thomas, and Northvolt’s facility in Quebec – despite Northvolt’s financial struggles and reports that its parent company is on the verge of bankruptcy.

Additional billions have gone to Ford and other automakers as part of Canada’s strategy to become a global battery hub.

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While these subsidies are intended to create jobs and secure supply chains, they come with immense financial and economic risks. There is no guarantee that Canada’s EV industry will be globally competitive or that these government-backed projects will deliver on their promised returns.

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Ottawa has essentially chosen to apply a supply management-style approach to an emerging sector – limiting competition, inflating costs, and betting taxpayer money on an industry that is far from proven. As history has shown, when markets are heavily managed, consumers end up with higher prices, lower quality, and fewer choices.

In prioritizing Ontario and Quebec’s manufacturing jobs, Ottawa has knowingly sacrificed the interests of Canadian farmers and seafood harvesters. Yet, rather than acknowledging this trade-off or offering support, the federal government has remained largely silent.

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The absence of a response from new Agriculture Minister Kody Blois is particularly troubling. With farmers already struggling due to rising costs and declining margins, the imposition of 100% tariffs on critical exports is a major blow. If Minister Blois does not act swiftly to defend Canada’s agricultural sector, farmers and seafood harvesters will be left to bear the full weight of Ottawa’s geopolitical gamble.

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Canada’s handling of this trade war has been reckless. Instead of mitigating risks, the government has gone all in on an industry that remains untested while turning its back on agricultural sectors that have long been pillars of the Canadian economy.

If Minister Blois and the Carney government fail to intervene, the economic consequences for Canadian farmers and seafood producers will be severe. Ottawa may have been willing to make this gamble, but it’s the agricultural sector that will ultimately pay the price. What a mess.

– Dr. Sylvain Charlebois is the Director of the Agri-Food Analytics Lab at Dalhousie University and co-host of The Food Professor Podcast

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