Canada and China have reached an initial trade deal that will reduce tariffs on electric vehicles and canola, Prime Minister Mark Carney said, as the two nations pledged to remove trade barriers while building a new strategic relationship.
The agreement was announced Friday during Carney’s visit to Beijing.
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Canadian Prime Minister’s first visit to China since 2017 Carney is trying to rebuild the relationship It is the country’s second largest trading partner after the United States after months of diplomatic efforts.
Canada will initially allow up to 49,000 Chinese electric vehicles on most-favoured-nation terms at a rate of 6.1 percent, Carney said after talks with Chinese leaders, including President Xi Jinping. He did not specify a time frame.
That compares with a 100 percent tariff on Chinese electric vehicles imposed by former Prime Minister Justin Trudeau’s government in 2024, following similar US penalties. In 2023, China exported 41,678 EVs to Canada.
“It’s back to pre-recent trade friction levels, but with an agreement that promises a lot for Canadians,” Carney told reporters.
Trudeau justified his tariffs on the grounds that Chinese producers had an unfair edge in the global market benefiting from state subsidies, a situation that threatened domestic producers.
“For Canada to build its own competitive EV sector, we need to learn from innovative partners, tap into their supply chains and drive local demand,” Carney said.
He pointed to a strong partnership with China in clean energy storage and generation, which has spurred new investment.
Carney said the EV deal would “hugely” boost Chinese investment in Canada’s auto sector, create better careers and accelerate toward a net-zero future.
Doug Ford, premier of Ontario, Canada’s main car-producing province, complained that China now has a Canadian foothold and will take full advantage.
“The federal government is inviting a flood of cheaply made China electric vehicles with no real guarantee of equal or immediate investment in the Canadian economy, auto sector or supply chain,” he said in a post on X.
reducing rates
Last March, in retaliation for Trudeau’s tariffs, China slapped tariffs on more than $2.6bn of Canadian agricultural and food products, such as canola oil and meal, followed by tariffs on canola seed in August.
This led to a 10.4 percent drop in China’s 2025 imports of Canadian goods.
Under the new agreement, Carney said, Canada expects China to reduce tariffs on its canola seeds by March 1, by a combined rate of about 15 percent.
“This change represents a significant reduction from the current combined tariff level of 84 per cent,” he said, noting that China is a $4bn canola seed market for Canada.
Canada expects its anti-discriminatory tariffs on canola meal, lobster, crab and peas to be removed from March 1 until at least the end of the year.
The deals will unlock nearly $3 billion in export orders for Canadian farmers, fish harvesters and processors, Carney said.
He also said Xi had committed to ensuring visa-free access for Canadians traveling to China, but did not elaborate.
In a statement released by China’s state-run Xinhua news agency, the two nations pledged to resume high-level economic and financial dialogue, boost trade and investment, and strengthen cooperation in agriculture, oil, gas and green energy.
Carney said Canada will double its energy grid over the next 15 years, with opportunities for Chinese partnerships in investments including offshore wind.
He also said Canada is increasing LNG exports to Asia and will produce 50 million tonnes of LNG per year – all destined for Asian markets by 2030.
China ‘more predictable’
“Given the current complexities in Canada’s trade relationship with the U.S., the Carney government is eager to improve bilateral trade and investment ties with Beijing, which represents a large market for Canadian farmers,” said Beijing-based Trivium China Even Rogers Pay.
“In the meantime, it’s hard to criticize Washington for making a lucrative trade deal with Carney when Trump did just that in October.”
US President Donald Trump has also imposed tariffs on some Canadian goods, suggesting the longtime US ally could become his country’s 51st state.
China, which has been similarly hit by Trump’s tariffs, is eager to cooperate with the Group of Seven nations in America’s traditional sphere of influence.
“The way our relationship has progressed with China in recent months, it’s more predictable and you’re seeing the results,” Carney said when asked if China was a more predictable and reliable partner than the US.
Carney said he had discussed Greenland with Xi. “I found a lot of alignment of thought in that regard,” he said.
Trump has recently revived his claim to the semi-autonomous Danish territory as NATO members scramble to counter US criticism that Greenland is underprotected.
Sino-US rivalry
Analysts say the rapprochement could shape the political and economic context in which the Sino-US rivalry unfolds, although Ottawa is not expected to dramatically move away from Washington.
“Canada is a key ally of the US and is deeply embedded in the US security and intelligence framework,” said Sun Chenghao, a fellow at Tsinghua University’s Center for International Security and Policy.
“So a strategic move away from Washington is very unlikely.”
But if Ottawa takes a more pragmatic and autonomous economic policy toward China, Beijing could point to it as evidence that US-led decoupling is neither inevitable nor universally accepted among America’s closest partners.