Western Canada’s canola farmers are the latest victims of misguided government industrial policy
Economic policy is more like gardening than engineering. You can shovel all the money you want into trying to grow coconuts in a Canadian winter, but you’ll achieve far better results—and feed many more people—by planting potatoes in the spring and letting nature run its course.
For Canada, that means embracing policies that create fertile ground for all businesses to compete, innovate, and serve consumers. Ottawa, unfortunately, prefers to play God with the weather. What began as economic tinkering has triggered a cascade of interventions now devastating Canada’s canola industry.
Rather than letting the market determine Canada’s strengths, federal and provincial politicians decided they knew better, wagering $52.5 billion to lure EV and battery manufacturers to Canada. Massive public subsidies were placed on a handful of firms and technologies.
The Parliamentary Budget Officer delivered a sobering assessment of this boondoggle: it could take decades for taxpayers to break even on these subsidies—and only if nothing goes sideways.
Well, you know what they say about best-laid plans.
After committing billions, Ottawa faced an awkward truth: Chinese manufacturers were eating our lunch, offering EVs at lower prices, thanks in part to their own subsidies. Instead of reversing course, Ottawa hit the panic button and slapped a 100 per cent tariff on Chinese EVs.
Let’s be clear: this wasn’t about national security or consumer protection. It was about salvaging one of the largest industrial bets in Canadian history.
Yes, some sectors require targeted oversight to protect privacy and safety. EVs aren’t one of them. Their risks can be managed with targeted regulations and technical safeguards. But the tariffs do real damage by blocking affordable EVs and denying Canadians the right to judge for themselves.
Predictably, China didn’t take the tariffs lying down. In March, Beijing slapped 100 per cent duties on Canadian canola oil. In August, it hit canola seed with 75.8 per cent tariffs, effectively shutting out Canadian farmers from a $4.9-billion market.
Ninety-nine per cent of canola fields are in Western Canada. Canola is Canada’s top crop export, supporting tens of thousands of Prairie jobs and generating over $43 billion annually.
Another trade war, another lose-lose. Canadians pay more for EVs. Chinese consumers pay more for food.
And now, predictably, agricultural lobbyists are seeking Ottawa’s help. The government—having started the fire—has responded with $370 million in biofuel incentives and expanded financial support for canola producers. More subsidies. More distortion. Another Band-Aid for another self-inflicted wound.
Ironically, Canada’s farm sector already receives substantial government support. Now it’s receiving even more just to survive Ottawa’s protection of a separate subsidized industry. That’s the trouble with industrial policy: helping one sector often means hurting another. And taxpayers get the privilege of funding both.
There’s a better way forward: it doesn’t involve doubling down on mistakes. The solution is to stop the engineering and let the economy breathe. Lower taxes. Fewer regulations. Neutral infrastructure investment. These create the conditions for businesses to rise or fall on merit. That’s how innovation flourishes: through competition, not cabinet-level favouritism.
It’s not hard to follow the dominoes. EV subsidies triggered Chinese tariffs. Tariffs triggered canola retaliation. Canola retaliation now triggers demands for bailouts.
One attempt to pick winners has manufactured a long list of losers.
Had Ottawa stuck with free-trade principles, Canadians could’ve had more affordable EVs, taxpayers would’ve saved billions, and canola farmers would still have access to a vital export market.
Instead, we get a chain reaction of policy “fixes,” each one compensating for the damage done by the last—each one digging the hole deeper.
When governments try to engineer economic outcomes, citizens foot the bill. The real lesson? Governments are great at creating problems. Markets are better at solving them.
If Canada wants a prosperous economic future, it must stop betting the farm on political hunches and let competitive markets do the cultivating.
Conrad Eder is a policy analyst at the Frontier Centre for Public Policy.
