Canada and China have reached a preliminary trade agreement that significantly reduces tariffs on electric vehicles and canola, marking a reset in bilateral relations after months of escalating trade frictions.
The agreement was announced in Beijing during Prime Minister Mark Carney’s visit, the first by a Canadian leader since 2017, as Ottawa moves to stabilize ties with its second-largest trading partner after the United States.
Under the deal, Canada will allow up to 49,000 Chinese electric vehicles to enter the country at a 6.1 percent most-favoured-nation tariff rate, reversing the 100 percent levy imposed in 2024.
China, in turn, has agreed to sharply cut retaliatory tariffs on Canadian canola products, easing pressure on a sector heavily affected by last year’s trade dispute.
Carney said the new EV quota represents a return to trade levels seen before recent tensions and is expected to attract Chinese investment into Canada’s auto sector.
“This is a return to levels prior to recent trade frictions, but under an agreement that promises much more for Canadians,” he said.
The import limit is set to rise to 70,000 vehicles by the fifth year of the agreement, a move the government argues will support clean energy goals while remaining a small share of the domestic auto market.
Ontario Premier Doug Ford criticized the decision, warning that it could expose Canada to an influx of low-cost imports without firm investment guarantees.
The shift contrasts with broader North American policy, as Mexico recently raised its own tariffs on Chinese EVs and the United States has maintained steep duties.
China’s tariffs on Canadian canola seed are expected to fall to about 15 percent by March 1 from combined rates exceeding 80 percent, with additional farm and seafood products receiving temporary relief.
Carney said the changes could unlock nearly $3 billion in export orders and help reverse a decline in Canadian shipments to China.
Beyond trade, both countries pledged to restart high-level economic dialogue and expand cooperation in energy, agriculture, and green technology.
The talks unfolded as Canada reassesses its global trade strategy amid new U.S. tariffs and political uncertainty, with Carney describing recent engagement with Beijing as “more predictable.”
Analysts said the rapprochement may influence the broader context of Sino-U.S. rivalry without signaling a fundamental shift away from Washington.