Beijing has imposed tariffs on agricultural exports from the West in retaliation against electric vehicle tariffs on Chinese electric vehicle exports. Canada, the European Union, and the U.S. now face billions in agricultural tariffs after they restricted Chinese automakers from exporting mid to low cost EVs into their markets. According to Chinese officials, the farm tariffs will remain until Western nations remove vehicle import duties imposed on China.
In May 2024, Washington quadrupled Chinese electric vehicle tariffs to 100%, with Europe following in July with rates between 17% and 35% and Canada matching American levels the next month. The main goal is to protect Western automakers from being pushed out of their local markets by Chinese automakers and their affordable electric cars. China responded to these tariffs by targeting farm products that hurt politically powerful rural communities.
China went after European pork and brandy, Canadian canola, and soybeans, striking right at the heart of farming regions that typically wield outsized political influence. At the moment, China is effectively locked out of three of the largest EV markets on the globe due to the tariffs placed on its EV exports by Canadian, European, and American authorities. By targeting rural voters in their food producing areas, Peking University associate professor Mingzhi Jimmy Xu says, Beijing hopes to put pressure on policymakers and push them to drop Chinese EV tariffs.
In Canada, canola growers saw their $4.9 billion Chinese sales vanish after China imposed tariffs on canola seed imports and basically locked them out of their second largest market. A Chinese embassy official told Canadian media in October that China would adjust its tariff policies if Ottawa changed its approach on vehicles, steel, and aluminum products.
France, an aggressive advocate for tariffs on Chinese EV exports, saw China levy retaliatory tariffs on French cognac. Chinese buyers previously purchased around $1.7 billion worth annually but data shows that exports to China dropped by 35% after duties took effect last October. Beijing also imposed a 62% tariff on European pork exports last September, targeting another major European agricultural export.
American soybean growers face maximum risk as the revenue they get from China is in the tens of billions of dollars. China bought 27 million tons valued at $12.6 billion in 2024, exceeding combined soybean exports from Mexico and the EU. Fresh crop exports to China disappeared entirely by September due to tariffs, forcing the American Soybean Association to call for negotiations, as there is no other buyer that can feasibly replace China.
However, despite rising farmer appeals, Western nations are unlikely to reverse the tariffs they have placed on Chinese EVs. Since Western leaders see Chinese electric cars as both security and economic threats, they may opt for different approaches to protect their farming communities. This includes discovering new markets, providing government assistance, or signing new international purchasing agreements to sustain farmers without surrendering on vehicle policies.
As these vehicle policies remain in place, Western automakers like Rivian Automotive Inc. (NASDAQ: RIVN) have a window to ramp up their production and capture the domestic market before more affordable imports eventually find their way in.
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