Canadian agriculture is the early winner in China offers, RBC says

RBC economist Salim Zanzana stated in a Feb. 2 report that Canada and China’s latest de-escalation of commerce tensions ought to present near-term reduction for exporters within the Prairies and coastal areas, significantly these in agriculture and seafood which have confronted materials losses from decreased Chinese language market entry.

Below the settlement, China will take away 25% tariffs on Canadian seafood, peas, and canola meal, and sharply scale back tariffs on canola seed to fifteen% from 75.8%, efficient March 1. In trade, Canada will decrease tariffs on Chinese language electrical autos to six.1% from 100%, permitting imports of as much as 49,000 EVs this yr.

Zanzana stated the EV quota would end in Chinese language autos accounting for lower than 3% of Canadian registrations within the yr ending Q3 2025, suggesting the instant influence on the auto market is restricted. Nevertheless, he cautioned that the shift underscores longer-term aggressive pressures going through Canada’s manufacturing sector.

China’s tariffs had an instantaneous and pronounced impact on canola exports. Canola seed shipments to China successfully fell to zero in September and October 2025, contributing to a roughly 60% decline in exports to China from January by way of October in contrast with 2024. General, Canada’s canola exports declined about 13% over that interval, whereas farm money receipts fell 9% regardless of report manufacturing.

Zanzana famous that commerce flows had been already adjusting earlier than the tariff rollback. Exports of canola seed to markets outdoors the U.S. and China greater than doubled in 2025 to October from a yr earlier, partially offsetting misplaced Chinese language demand. The share of Canadian canola seed exports going to China had already fallen from practically 80% in September 2024 to lower than 50% following Canada’s earlier tariffs on Chinese language EVs and metals, suggesting exporters anticipated retaliatory motion.

The influence of tariffs was concentrated regionally. Saskatchewan, Alberta, and Manitoba — which collectively account for roughly $4-billion of Canada’s $6-billion in canola seed exports — noticed export declines of 10%, 10%, and 15%, respectively, in 2025 to October. Coastal provinces had been hit hardest on seafood, with exports to China down roughly 30% in each British Columbia and Nova Scotia, contributing to broader seafood export declines.

RBC stated the elimination of tariffs on seafood, peas, and canola meal ought to scale back draw back dangers to its near-term financial forecasts for the Prairies, Atlantic Canada, and British Columbia. Whereas the remaining 15% tariff on canola seed nonetheless poses friction, Zanzana stated the discount meaningfully improves market entry, at the same time as Canadian canola continues to compete globally towards untariffed suppliers.

On the farm degree, the economist stated producers are extra doubtless to answer value alerts than tariff adjustments alone, including that the settlement gives some added confidence heading into the 2026 seeding season, with canola costs monitoring broadly consistent with year-ago ranges.

On the auto facet, Zanzana stated the tariff concession highlights a shift in danger. Even when EV import quotas rise to 70,000 models over the following 5 years, Chinese language autos would nonetheless symbolize lower than 4% of annual gross sales, however aggressive stress may intensify over time. Federal projections recommend greater than 50% of Chinese language EVs may very well be priced under $35,000 by 2030, in contrast with a median EV value close to $70,000 in Canada at the moment.

Zanzana concluded that whereas the truce gives near-term reduction for agriculture, longer-term uncertainty stays round each the sturdiness of tariff removals, at present assured solely by way of 2026, and the evolving implications for Canada’s auto sector and broader industrial base.

-30-