In mid-January, Canada and China announced a preliminary agreement to ease a trade dispute that had effectively closed the Chinese market to Canadian canola for most of 2025. Under the deal, China is expected to reduce the combined tariff on Canadian canola seed to 15%, from around 85%, starting on 1 March 2026. Tariffs on canola meal are also due to be removed from the same date, at least until the end of the year. In exchange, Canada will allow an initial quota of Chinese electric vehicles at its standard tariff rate.

Why it matters

Canada is the world's largest exporter of canola, and China was its largest customer, taking around a third of Canadian canola exports in 2024. When Chinese anti-dumping duties were imposed in 2025, that trade almost disappeared, Canadian prices fell, and Chinese crushers had to replace the seed with other oilseeds, mainly soybeans and, in smaller volumes, Australian canola.

The reopening is therefore a major change:

  • For Chinese crushers: access to a large, reliable source of high-oil seed and a way to diversify away from soybeans.
  • For Canadian exporters: the return of their main market, supporting prices for the 2026 crop.
  • For other origins: more competition in the Chinese market for Australian canola and some pressure on alternative oilseeds.

Open questions

Canola oil is not covered by the announcement and remains subject to a 100% tariff. The agreement is also described as preliminary, so the final terms and their duration still need to be confirmed. Buyers should expect a gradual return of flows rather than an immediate surge.

Our view

This is a positive step for the global oilseed market, which works best when trade flows are open and diversified. Combined with a record South American soybean harvest, it gives East Asian crushers more choice in 2026 than they have had for two years. DBI Resources follows the oilseed complex across all major origins and can advise clients on the best sourcing mix.

Sources: Government of Canada announcement, January 2026; Canola Council of Canada; Canadian Canola Growers Association.