Canada, China slash EV, canola tariffs in reset of ties

Highlights:

• Canada to allow Chinese EV imports at 6.1% tariff, Carney says
• Says Canada expects China to lower canola tariff
• Canada welcomes further Chinese investment
• Trump expresses support for deal

Canada and China struck an initial trade deal on Friday that will slash tariffs on electric vehicles and canola, as both nations promised to tear down 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 in up to 49,000 Chinese electric vehicles at a tariff of 6.1% on most-favoured-nation terms, Carney said after talks with Chinese leaders including President Xi Jinping.

That compares with the 100% tariff on Chinese electric vehicles imposed under former Prime Minister Justin Trudeau in 2024, following similar US penalties. In 2023, China exported 41,678 EVs to Canada.

"This is a return to levels prior to recent trade frictions, but under an agreement that promises much more for Canadians," Carney told reporters. He later said the quota would gradually increase, reaching about 70,000 vehicles in five years.

"For Canada to build its own competitive EV sector, we will need to learn from innovative partners, access their supply chains, and increase local demand," Carney said, turning away from Trudeau's rationale that tariffs were needed to protect domestic producers against subsidised Chinese manufacturers.

Relaxing EV tariffs diverged from US policy, and some members of US President Donald Trump's cabinet criticised the decision ahead of an expected review of the US-Canada-Mexico trade deal.

But Trump himself expressed support for Carney. "That's what he should be doing. It's a good thing for him to sign a trade deal. If you can get a deal with China, you should do that," Trump told reporters at the White House.

Agri-food partnership

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

"The federal government is inviting a flood of cheap made-in-China electric vehicles without any real guarantee of equal or immediate investments in Canada's economy, auto sector or supply chain," he said in a post on X.

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

That led to a 10.4% slump in China's imports of Canadian goods in 2025.

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

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

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

China's Commerce Ministry said in a statement China was adjusting anti-dumping measures on canola as well as anti-discrimination measures on some Canadian agricultural and aquatic products in response to Canada lowering EV tariffs.

Carney added that Xi committed to visa-free access for Canadians travelling to China, but did not give details.

In a statement announced by China's state-run Xinhua news agency, the two nations 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 will double its energy grid over the next 15 years, adding there were opportunities for Chinese partnership in investments including offshore wind.

He also said Canada was scaling up its LNG exports to Asia and will produce 50 million tonnes of LNG each year - all destined for Asian markets by 2030.

Carney says China 'more predictable'

"Given current complexities in Canada's trade relationship with the US, it's no surprise that Carney's government is keen to improve the bilateral trade and investment relationship with Beijing, which represents a massive market for Canadian farmers," said Beijing-based Trivium China's Even Rogers Pay.

Trump has imposed tariffs on some Canadian goods and suggested the longtime US ally could become his country's 51st state.

China, similarly hit by Trump's tariffs, is keen to cooperate with a Group of Seven nation in a traditional sphere of US influence.

"In terms of the way our relationship has progressed in recent months with China, it is more predictable, and you see results coming from that," Carney said when asked if China was a more predictable and reliable partner than the US.

Carney also said he had discussions with Xi about Greenland. "I found much alignment of views in that regard," he said.

Trump has in recent days revived his claim to the semi-autonomous Danish territory as NATO members scrambled to counter US criticism that Greenland is under-protected.

Analysts said the rapprochement between Canada and China could reshape the political and economic context in which Sino-US rivalry unfolds, although Ottawa is not expected to dramatically pivot away from Washington.

"Canada is a core US ally and deeply embedded in American security and intelligence frameworks," said Sun Chenghao, a fellow at Tsinghua University's Centre for International Security and Strategy.

"It is therefore very unlikely to realign strategically away from Washington."