Prime Minister Mark Carney said Canada and China have signed their first trade deal, lowering tariffs on electric vehicles and rapeseed, and the two countries are committed to eliminating trade barriers while building a new strategic relationship.
The agreement was announced Friday during Carney’s visit to Beijing.
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The visit is the first by a Canadian prime minister to China since 2017, with Carney aiming to rebuild relations with the country’s second-largest trading partner after the United States after months of diplomatic efforts.
Carney said after consultation with Chinese leaders, including President Xi Jinping, Canada will initially allow imports of up to 49,000 Chinese-made electric vehicles at a 6.1 per cent tariff under most-favored-nation terms. The period was not disclosed.
This compares to former Prime Minister Justin Trudeau’s government imposing 100% tariffs on Chinese electric vehicles in 2024, following similar penalties in the United States. In 2023, China exported 41,678 EVs to Canada.
“This is back to where we were before the recent trade tensions, but with an agreement that promises even more for Canadians,” Carney told reporters.
Prime Minister Trudeau justified the tariffs by saying Chinese manufacturers, who benefit from state subsidies, have an unfair advantage in global markets, a scenario that threatens domestic producers.
“For Canada to build its own competitive EV sector, we need to learn from innovative partners, access supply chains and grow local demand,” said Carney.
He noted that increased cooperation with China in clean energy storage and production is driving new investment.
Carney said the EV agreement will encourage “substantial” Chinese investment in Canada’s auto sector, create viable carriers and accelerate the country toward a net-zero future.
Doug Ford, Premier of Ontario, Canada’s main auto-producing province, complained that China has a foothold in Canada and will take full advantage of it.
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lower tariffs
Last March, in retaliation for Prime Minister Trudeau’s tariffs, China imposed tariffs on more than $2.6 billion of Canadian agricultural products and food products, including canola oil and meal, followed by tariffs on canola seed in August.
As a result, China’s imports of Canadian products in 2025 decreased by 10.4%.
Carney said that under the new agreement, Canada expects China to reduce tariffs on canola seeds to a total of about 15 per cent by March 1.
“This change represents a significant reduction from the current overall tariff level of 84%,” he said, adding that China is a $4 billion canola seed market for Canada.
Canada also expects non-discriminatory tariffs on canola meal, lobster, crab and peas to be lifted from March 1 until at least the end of the year, he added.
Carney said the deal will open up nearly $3 billion in export orders for Canadian farmers, fish harvesters and processors.
He also promised that Xi would guarantee visa-free entry for Canadians traveling to China, but did not elaborate.
In a statement released by China’s state-run Xinhua News Agency, the two countries pledged to resume high-level economic and financial dialogue, promote 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 are opportunities to partner with China on investments including offshore wind.
He also said Canada is expanding LNG exports to Asia, with plans to produce 50 million tonnes of LNG each year, all destined for Asian markets by 2030.
China is ‘more predictable’
“Given the current complexity of the Canada-U.S. trade relationship, it is not surprising that the Carney administration is keen to improve bilateral trade and investment relations with Beijing, which is a huge market for Canadian farmers,” said Even Rogers Pei of Beijing-based Trivium China.
“On the other hand, it is difficult for the United States to criticize Prime Minister Carney, with whom President Trump himself just signed a beneficial trade deal in October.”
US President Donald Trump has also imposed tariffs on some Canadian products and suggested the longtime US ally could become Canada’s 51st province.
China, which has also been hit by President Trump’s tariffs, is keen to work with the G7 countries, which are traditionally areas of U.S. influence.
Asked if China was a more predictable and reliable partner than the United States, Carney said: “In terms of the evolution of our relationship with China in recent months, it’s been more predictable and you’ll see the results come from that.”
Carney also said he had discussed Greenland with Xi. “We found a lot of agreement on that,” he said.
President Trump has revived Denmark’s claim to the semi-autonomous territory in recent days, as North Atlantic Treaty Organization (NATO) countries scramble to counter U.S. criticism that they are not doing enough to protect Greenland.
Sino-American conflict
Analysts say that while Ottawa is not expected to dramatically move away from Washington, the move could reshape the political and economic landscape in which the Sino-American conflict plays out.
“Canada is a core ally of the United States and is deeply integrated into the United States’ security and intelligence framework,” said Sun Chenghao, a researcher at Tsinghua University’s Center for International Security Strategy.
“Therefore, it is very unlikely to strategically realign away from Washington.”
But if Ottawa takes a more pragmatic and autonomous economic policy toward China, Beijing could point to it as evidence that U.S.-led decoupling is inevitable and not universally accepted among America’s closest partners, he added.
