Canada and China cut tariffs on electric vehicles and canola to repair relations

Canada and China reached a first trade deal on Friday that will reduce tariffs on electric vehicles and canola, as the two countries promised to remove trade barriers while forging new strategic ties during Prime Minister Mark Carney’s visit.

The first Canadian prime minister to visit China since 2017, Carney is seeking to rebuild ties with his country’s second-largest trading partner after the United States, following months of diplomatic efforts.

Canada will initially allow up to 49,000 Chinese electric vehicles at a tariff of 6.1 per cent on most favored nation terms, Carney said after discussions with Chinese leaders, including President Xi Jinping.

That compares to 100% tariffs on Chinese electric vehicles imposed under former Prime Minister Justin Trudeau in 2024, following similar U.S. sanctions. In 2023, China exported 41,678 electric vehicles to Canada.

“This is a return to levels before the recent trade frictions, but in a deal that promises much more for Canadians,” Carney told reporters. He then said the quota would increase gradually, reaching around 70,000 vehicles in five years.

“For Canada to build its own competitive electric vehicle sector, we will need to learn from our innovative partners, access their supply chains and grow local demand,” Carney said, turning away from Trudeau’s reasoning that the tariffs were necessary to protect domestic producers from subsidized Chinese manufacturers.

Easing tariffs on electric vehicles was a departure from U.S. policy, and some members of U.S. President Donald Trump’s cabinet criticized the move on the eve of an expected review of the U.S.-Canada-Mexico trade deal.

But Trump himself has expressed support for Carney. “That’s what he should do. It’s a good thing for him to sign a trade deal. If you can make a deal with China, you should do it,” Trump told reporters at the White House.

Premier Doug Ford of Ontario, Canada’s main auto manufacturing province, denounced the deal.

“The federal government is inviting a flood of cheap electric vehicles made in China without any real guarantee of equal or immediate investment in Canada’s economy, auto sector or supply chain,” he said in an article on X.

In retaliation for Trudeau’s tariffs, China imposed tariffs on more than $2.6 billion worth of Canadian agricultural and food products such as canola oil and meal in March, followed by tariffs on canola seed in August.

This resulted in a 10.4% drop in Chinese imports of Canadian products in 2025.

Under the new deal, Carney said, Canada expects China to reduce tariffs on its canola seed by March 1, to a combined rate of about 15 percent, down from the current 84 percent.

Canada also expects anti-discrimination tariffs to be removed on canola meal, lobsters, crabs and peas from March 1 until at least the end of the year, he added.

Canadian canola futures prices increased.

The deals will unlock nearly $3 billion in export orders for Canadian farmers, fishermen and processors, Carney said.

China’s Ministry of Commerce said in a statement that China is adjusting anti-dumping measures on canola as well as anti-discrimination measures on certain Canadian agricultural and aquatic products in response to Canada lowering tariffs on electric vehicles.

Carney added that Xi had committed to granting visa-free access to Canadians traveling to China, but did not elaborate.

In a statement announced by China’s official Xinhua News Agency, the two countries pledged to restart high-level economic and financial dialogue, boost trade and investment, and strengthen cooperation in agriculture, oil, gas and green energy.

Carney said Canada would double its energy network over the next 15 years, adding there were opportunities to partner with China in investments, including in offshore wind.

He also said Canada was increasing its LNG exports to Asia and would produce 50 million tonnes of LNG each year, all destined for Asian markets by 2030.

“Given the current complexity of trade relations between Canada and the United States, it is not surprising that the Carney government would like to improve bilateral trade and investment relations with Beijing, which represents a huge market for Canadian farmers,” said Even Rogers Pay of Beijing-based Trivium China.

Trump imposed tariffs on some Canadian goods and suggested the longtime U.S. ally could become his country’s 51st state.

China, also affected by the tariffs imposed by Trump, wants to cooperate with a Group of Seven country in a traditional sphere of American influence.

“In terms of how our relationship has progressed in recent months with China, it’s more predictable and you’re seeing results come out of it,” Carney said when asked if China was a more predictable and reliable partner than the United States.

Carney also said he had discussions with Xi about Greenland. “I have seen a great convergence of views in this regard,” he said.

In recent days, Trump has revived his claims to the semi-autonomous Danish territory as NATO members have moved to counter US criticism that Greenland is under-protected.

Analysts say the rapprochement between Canada and China could reshape the political and economic context in which the Sino-American rivalry takes place, although Ottawa is not expected to radically distance itself from Washington.

“Canada is a major ally of the United States and is deeply embedded in the US security and intelligence frameworks,” said Sun Chenghao, a researcher at the Center for International Security and Strategy at Tsinghua University.

“It is therefore very unlikely that a strategic realignment will move away from Washington.”