China is willing to work with Canada to put ties on a healthy and stable path and find solutions to address each other’s concerns through enhanced dialogue, Premier Li Qiang told Canadian Prime Minister Mark Carney in a phone call on Friday, according to the state-run Xinhua news agency.

“There is no fundamental conflict of interests between the two countries,” Li said.

Carney and Li agreed to establish regular communication channels between Canada and China in a call on Thursday, the prime minister’s office said. The two leaders also discussed trade and committed their governments to working together to address the fentanyl crisis, the Canadian prime minister’s office said in a statement.

“Carney took the opportunity to raise trade irritants affecting agriculture and agri-food products, including canola and seafood, as well as other issues, with Premier Li,” the Canadian statement added.

The discussion followed a highly-anticipated phone call between U.S. President Donald Trump and Chinese President Xi Jinping on Thursday, which Trump said led to “a very positive conclusion” and offered hope the trade war between the world’s two largest economies might start to de-escalate.

As the effects of trade frictions start to make their way into the already soft Chinese economy, Beijing has stepped up engagement with other countries to alleviate friction despite earlier retaliation.

In March, Beijing announced tariffs on over $2.6 billion worth of Canadian agricultural and food products in retaliation for Ottawa’s levies on Chinese electric vehicles and steel and aluminium products introduced in October.

Beijing has also launched an anti-dumping investigation into Canadian canola that is set to conclude in September.

Canola, also known as rapeseed, was one of Canada’s top exports to China, the world’s No. 1 agricultural importer, prior to Beijing’s investigation.

“The two governments should listen to and respond to the people’s calls and do more to deepen the friendly cooperation and enhance mutual understanding and trust,” Li told Carney.

China is Canada’s second-largest trading partner, trailing far behind the United States. Canada exported $47 billion worth of goods to the world’s second-largest economy in 2024, according to Chinese customs data.

Beijing is also willing to work with Canada to safeguard multilateralism and free trade, Li added.

Beijing’s olive branch to Ottawa also comes ahead of a Group of Seven summit of leaders in Canada in mid-June.

At the G7 summit in Italy last year, G7 leaders were critical of China, saying they would take steps to shield their economies from China’s “unfair” practices.

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China intervened at a special meeting of the Dispute Settlement Body at the World Trade Organization on Thursday, the official said, adding that Canada can renew its request at a future meeting, with the next meeting scheduled for June 23.

In retaliation against Canadian levies on Chinese-made electric vehicles, China introduced 100 per cent tariffs on Canadian canola oil, canola meal and peas as of March 20. A 25 per cent duty on Canadian aquatic products and pork has also been in place since then.

In its request to the WTO, Canada said China unilaterally suspended concessions to Canada without first seeking recourse at the WTO or obtaining the authorization of the WTO Dispute Settlement Body, noting “China’s antidiscrimination investigation and subsequent imposition of countermeasures on products from Canada is a unilateral action that flies in the face of the well-established rules for resolving disputes under the multilateral trading system.”

Consultations with China took place on April 23 but failed to resolve the matter. Canada “remains open to continuing dialogue with China in a manner that will address Canada’s concerns and fully restore market access for Canadian agricultural, fish and seafood products in a timely fashion,” said a WTO summary of Thursday’s meeting.

China replied that it regretted Canada’s decision to seek the establishment of a panel, saying Canada imposed discriminatory and unilateral restrictions on Chinese imports despite opposition from all sides. China maintains the tariffs on certain Canadian products are legitimate measures taken in accordance with Chinese domestic law following a fair, impartial and transparent investigation process. In opposing Canada’s request, China said it believes it is still premature to establish a panel in this dispute.

– With files from the WTO

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They instead shared their frustrations over U.S. President Donald Trump’s potentially comprehensive tariffs on Canadian goods and services.

Tariffs will add costs

Chris Davison, president and CEO of the Canola Council of Canada, says canola growers are among those taking a “wait and see” approach to tariffs. That means any issues with Canadian counter-tariffs will be broached when or if the U.S. tariffs materialize.

“If we were faced with tariffs, and if the (Canadian) government were to decide to proceed with retaliatory tariffs, obviously we would want that done in a way that minimizes the impact on the canola industry,” said Davison March 26.

“We can’t afford as an industry to add more costs in the already very tough and challenging circumstances the industry is facing in terms of demand for our products today.”

The impact of tariffs — be they from the U.S., China or retaliatory tariffs by Canada — on the Canadian canola industry will depend on three things, said Davison: the size of the tariffs, the products to which they’re applied and the length of time they’re in place.

“At a minimum, tariffs create uncertainty and unpredictability,” he said.

They make planning and decision-making harder, increase costs at high levels. They restrict or close markets.

“As of today, we don’t know what, if any, tariffs Canadian canola or canola products might face from the U.S. and so it will very much depend on if or not that comes to pass and then what, if anything, the government decides to do in response to that.”

Davison would prefer to see neither Canada nor the U.S. hurt by tariffs.

“We have a highly integrated canola industry between Canada and the United States, and that benefits not just Canada but the U.S. significantly as well in terms of farmers, consumers and businesses on both sides of the border.

“When we have these integrated supply chains that rely on smooth, predictable trade, we don’t want to adversely impact parties on either side of the border in that regard.”

He does not think the brunt of any tariff activity will be felt by canola growers this spring — at least for those who have already purchased their seed and inputs.

“Farmers who plant canola every year, of which there are about 40,000 across Canada, are notoriously good planners and they plan out of necessity months, if not longer, in advance.”

Davison believes canola producers are already planning to plant less canola this year in response to tariffs and lower crop prices, but some may switch those acres back to canola, depending on the tariff outlook.

“I think we will go into Spring 2025 seeding with significant plans that are already in place by farmers, but also with a limited number of acres that will be in flux, that farmers will be looking to see if they can optimize their plans for 2025.”

Disrupting trade, food security

A March 27 email from the Canadian Pork Council re-confirmed the council’s stance on tariffs.

“The Canadian Pork Council remains firmly opposed to tariffs because they disrupt food security on both sides of the border,” it read.

“The integrated nature of the North American pork industry means that trade barriers ultimately harm producers and consumers in both Canada and the United States.”

The email addressed CPC’s support of the federal government in its efforts to navigate complex trade challenges.

“We trust that ongoing discussions will prioritize the stability and competitiveness of Canadian agriculture while maintaining strong trade relationships with key partners.”

As in most supply-managed industries, the Egg Farmers of Canada’s focus is primarily on meeting domestic need. However, that doesn’t shield them from the effects of tariffs.

“Like most sectors, an extended trade disruption with the U.S. could affect the availability and costs of critical inputs into farming and within our overall food supply chain, such as feed ingredients,” wrote the organization in an email response March 27.

“While this is a challenging time for many, we appreciate the collaborative approach across governments and value chain to find solutions that support farmers, Canada’s agriculture sector and most importantly, Canadians in all regions of the country.”

David Wiens, president of Dairy Farmers of Canada, said the dairy industry is also not immune to the effects of tariffs, despite its supply management-driven domestic focus.

“Like all Canadians, we think there are no winners in the current tariff situation, and we are deeply concerned about the impacts that this will have on consumers, industries, and economies on both sides of the border,” wrote Wiens in a March 26 email.

“Under the supply-managed system, dairy farmers prioritize meeting the needs of the Canadian consumers. Tariffs will affect all sectors of agriculture including dairy, in part because of the reliance on foreign inputs. Equipment, fertilizers, veterinary products and other inputs cross the border on both sides, and the costs of these will likely be impacted.”

He emphasized DFC’s own participation in finding ways to tackle a new economic reality.

“We are working collaboratively with governments and other industry stakeholders to find solutions to the current tariff situation with the U.S. and expect that they will continue to stand up for Canadian agriculture and farmers.”

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Grain Growers of Canada has perused the long list of potential U.S. counter-tariff targets put forward by the Canadian government to identify which products could pose a threat.

“One of them that comes to the top of the list is fertilizer, and more specifically, phosphate fertilizer,” said executive director Kyle Larkin.

That is because there is no domestic phosphate production in Canada, so farmers rely on imports, and the United States is the major supplier of the nutrient.

“A 25 per cent tariff on phosphate fertilizer definitely would have an impact on grain farmers,” Larkin said.

Canada imported an average of 4.12 million tonnes of fertilizer per year from the U.S. from 2018-23 , according to statistics provided by Fertilizer Canada.

That total includes 1.46 million tonnes of monoammonium phosphates (MAP) and 92,027 tonnes of diammonium phosphate (DAP).

It also includes 937,000 tonnes of urea, 310,158 tonnes of ammonium nitrate and 518,232 tonnes of fertilizers containing a combination of nitrogen and phosphorus.

There is even some U.S. potash coming into Eastern Canada, which is replacing product from Russia and Belarus that has been pushed out of the market by Canadian tariffs.

Compensation needed

The good news is that much of the fertilizer for the 2025 growing season has already been ordered by farmers and imported by Canadian retailers.

The bad news is that Canada’s pending tariffs could result in a 25 per cent hike in prices for U.S.-sourced product in 2026.

“Farmers are already experiencing dropping commodity prices, and the cost of inputs are already sky-high, and they’re facing increased government regulations and taxation,” said Larkin.

He said the potential fertilizer tariffs are a “massive concern” for farmers. If they come into effect, Ottawa better be prepared to compensate growers.

“Any funds derived and raised through tariffs on essential products such as fertilizer should be going back to the producer,” said Larkin.

What is already under tariffs?

Canada has already implemented a 25 per cent tariff on $30 billion worth of U.S. goods effective March 4.

That list includes products such as orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics and certain pulp and paper products.

In addition, another $29.8 billion in tariffs on U.S. steel and aluminum imports is scheduled to go into effect March 13 in response to U.S. tariffs on Canadian steel and aluminum.

Canada intends to impose countermeasures on another $125 billion in U.S. imports if U.S. president Donald Trump follows through on his promise to apply 25 per cent tariffs on a broad spectrum of Canadian and Mexican goods on April 2.

The list for that potential third tranche of tariffs includes electric vehicles, fruits and vegetables, beef, pork, dairy, electronics, steel, aluminum, trucks, buses and fertilizer products.

That third round of tariffs is subject to a comment period that ends on April 2. The government says it is seeking views from business, stakeholders and Canadians regarding the impact of the proposed tariffs.

“We’re putting together a submission to that consultation to ensure that the government acknowledges and realizes the impact these retaliatory tariffs could have on Canadian grain farmers,” said Larkin.

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U.S. President Donald Trump is already promising new tariffs and Canada remains at the economic ramparts.

As a coffee mug I saw today wryly noted, we are all now tariff war veteran.

The politics

The Reuters news service reported on Friday that U.S. President Donald Trump railed against what he called tremendously high Canadian tariffs on dairy and lumber, and said his administration could soon impose reciprocal tariffs on Canadian products.

“Canada has been ripping us off for years on tariffs for lumber and for dairy products,” Trump told reporters in the Oval Office. “They’ll be met with the exact same tariffs, unless they drop it, and … we may do it as early as today or we’ll wait ‘til Monday or Tuesday.”

Trump also mentioned India’s high tariff rates, but said India had agreed to lower its import duties.

The comments add to Trump’s trade pressure campaign against the Canadian government, which he accuses of failing to stop the flow of fentanyl across the northern U.S. border and of unfairly taking advantage of the U.S. market.

Trump also said on Friday that he gave Canada and Mexico a break from his new 25 per cent tariffs for goods compliant with a regional free trade deal because he wanted to help automakers, but added that the reprieve was a short-term measure and tariffs could go up over time.

But he said that on April 2, reciprocal tariffs would be implemented to equalize any duty rates between the three countries. Under the 2020 U.S.-Mexico-Canada Agreement on trade that he negotiated and signed, there are almost no tariffs on products crossing North American borders.

“I wanted to help the American carmakers until April 2nd,” Trump said. “April 2nd, it becomes all reciprocal. What they charge us, we charge them. It’s a big deal.”

Trump, in an interview aired by Fox Business Network a day after the 30-day delay, said: “I thought it would be a fair thing to do, and so I gave them a little bit of a break for this short period of time.”

Speaking to media federal conservative leader Pierre Poilievre, who political opponents have attempted to paint as Trump-friendly, had his strongest words yet, telling the U.S. president to “knock it off” and “stop the chaos.”

Meantime the first wave of Canadian counter-tariffs remain in effect, but the second tranche, worth an additions $125 billion, are on pause until April 2.

Farmer supports

On Friday, the federal Department of Finance announced several investments meant to protect Canadian businesses, including $1 billion in financing through Farm Credit Canada (FCC). According to a news release, the money will help to reduce financial barriers in the agriculture sector.

“This lending offer will help address cash flow challenges so businesses can adjust to a new operating environment and continue to supply the high-quality agricultural and food products that Canadians rely on,” the release read.

The federal government also announced a $5 billion program to help Canadian exporters reach new markets.

The government also announced it will return to the $250,000 interest-free loan limit of the Advanced Payments Program (APP) through the 2025-26 program year. It was previously announced at $100,000.

Tyler McCann, managing director of the Canadian Agri-Food Policy Institute, said he was glad to see the government taking some action.

However, McCann said many of Friday’s investment announcements fall short.

“I think that there’s a really big difference between extending more credits to Canadian businesses, which is largely what today’s announcement was, and the government investing in things like the agri-marketing program,” he said.

A summit planned for the end of the month will bring together producers from across Saskatchewan to talk about critical agricultural issues.

Tariffs and trade are at the top of the list.

Agricultural Producers Association of Saskatchewan president Bill Prybylski said eight groups have come together to host the summit in Saskatoon. Typically, APAS hosts a policy conference in conjunction with its spring board meeting, and this year the event is broader.

“Obviously the tariffs are the big topic of discussion, but there are a lot of other things that we need to talk about,” he said.

The president of Canada’s largest farm organization says people are anxious about looming tariffs and other uncertainties.

Keith Currie said the Canadian Federation of Agriculture re-focused much of the group’s recennt annual meeting agenda because of that environment.

“We really pivoted much of our discussions that we had originally intended at the AGM because of not only the tariff threat but also what’s happening with our own government situation here in Canada,” he said after the meeting.

The unknowns are unsettling, he added.

-With files from Reuters, Karen Briere and Jonah Grignon

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