The World Trade Organization (WTO) has officially moved to intervene in escalating trade tensions between Canada and China by establishing two separate expert panels to examine claims of unfair tariff practices filed by both countries. The panels were approved during a meeting of the WTO’s Dispute Settlement Body (DSB) on Monday, June 23, 2025.
The first panel was initiated in response to a complaint from Beijing regarding what it termed “surtax measures” imposed by Canada on imports of Chinese electric vehicles, steel, and aluminium products. China argued that these measures violate several provisions of the General Agreement on Tariffs and Trade (GATT) and constitute a protectionist move aimed at excluding state-subsidised Chinese products from the North American market.
In a separate move, Canada filed its own complaint, challenging China’s retaliatory import duties on several Canadian agricultural and fisheries products, including rapeseed oil, oil cakes, and peas. These items have been hit with tariffs as high as 100 percent, according to WTO documents.
The dispute between the two economic powerhouses has been brewing since 2024, when Ottawa imposed 100% tariffs on Chinese electric vehicles, aligning itself with the United States in efforts to curb a flood of subsidised EVs from China. Beijing responded in kind in March 2025, with new tariffs targeting Canada’s agricultural exports—a move that Canadian officials view as retaliatory and inconsistent with WTO rules.
China, during Monday’s DSB meeting, reiterated its position that the Canadian tariffs were unjustified and urged for constructive dialogue. A Chinese representative said, “China remains committed to resolving the dispute but considers Canada’s actions inconsistent with WTO obligations.”
On the other hand, Canada’s delegate pushed back against what they described as unilateral determinations by China, and raised concerns that Beijing’s panel request includes sectors such as solar products, semiconductors, critical minerals, and natural graphite—areas where Ottawa insists it has not imposed any surtax measures.
“Canada has no surtax in place on these items, and we view China’s inclusion of them in its complaint as inaccurate and misleading,” said the Canadian representative, adding that Canada also seeks a rules-based resolution through the WTO system.
Beyond trade, relations between Ottawa and Beijing have been strained since the 2018 arrest of Huawei executive Meng Wanzhou on a U.S. extradition request, which triggered retaliatory arrests of Canadian citizens in China. Though those cases have since been resolved, trust between the two governments remains fragile.
In a bid to de-escalate diplomatic tensions, Canadian Prime Minister Mark Carney and Chinese Premier Li Qiang recently agreed to reopen bilateral communication channels, with a view to stabilizing relations amid growing global economic uncertainty.
The WTO panels will now review evidence and hear arguments from both sides, with final reports expected within six to nine months. The outcomes could influence how future tariffs and retaliatory trade policies are handled globally, especially between powerful economies.
Trade experts believe the case could test the limits of WTO rules in dealing with state subsidies, national security exceptions, and the weaponization of tariffs in geopolitical conflicts.
“These cases are about more than just tariffs on steel or peas. They reflect a deeper confrontation between industrial strategies and trade rules in a multipolar world,” said Dr. Eloise Harper, a trade analyst at the University of Toronto.
While the WTO process unfolds, both nations have expressed a willingness to maintain constructive dialogue. However, without interim solutions or compromises, trade disruption is likely to persist—particularly for industries and farmers dependent on stable bilateral trade flows.
As the global community watches, the resolution of the Canada-China trade dispute will serve as a critical litmus test for multilateralism, global trade governance, and the WTO’s effectiveness in a divided international order.