Canada, China strike trade deals to slash tariffs on EVs, canola

Carney is the first Canadian PM to visit China since 2017 and is seeking to rebuild ties as he looks for new markets to offset US tariffs.Canadian Prime Minister Mark Carney shakes hands with President of China Xi Jinping as the two countries aim to reset ties [Sean Kilpatrick/Pool via Reuters]Published On 16 Jan 2026Canada and China have struck an initial trade deal that will slash tariffs on electric vehicles and canola, Prime Minister Mark Carney has said, as both nations promised to tear down trade barriers while forging new strategic ties.The deal was announced on Friday during Carney’s visit to Beijing.Recommended Stories list of 4 itemslist 1 of 4Why is Iran’s economy failing, prompting deadly protests?list 2 of 4Ukraine scrambling for energy as Russian strikes hit infrastructurelist 3 of 4Why is Venezuela ‘uninvestable’ for Big Oil?list 4 of 4Trump threatens tariffs over Greenland, calls it vital for securityend of listThe first Canadian prime minister’s visit to 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 percent on most-favoured-nation terms, Carney said after talks with Chinese leaders, including President Xi Jinping. He did not specify a time period.That compares with the 100 percent tariff on Chinese electric vehicles imposed by the government of 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.Trudeau justified his tariff on the grounds that there was an unfair global market edge for Chinese manufacturers benefiting from state subsidies, a scenario that threatened domestic producers.“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.He pointed to a stronger partnership with China in clean energy storage and production, driving new investments.Carney said he expected the EV pact would drive “considerable” Chinese investment into Canada’s auto sector, create good careers and speed it towards a net-zero future.Doug Ford, premier of Ontario, Canada’s main car manufacturing province, complained China now had a Canadian foothold and would take full advantage.“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.Lowering tariffsLast March, in retaliation for Trudeau’s tariffs, China levied tariffs on more than $2.6bn of Canadian farm and food products, such as canola oil and meal, followed by tariffs on canola seed in August.That led to a slump of 10.4 percent in China’s 2025 imports of Canadian goods.Under the new deal, Carney said, Canada expects China will lower tariffs on its canola seed by March 1, to a combined rate of about 15 percent.“This change represents a significant drop from current combined tariff levels of 84 percent,” he said, adding China was a $4bn canola seed market for Canada.Canada also expects its canola meal, lobsters, crabs and peas to have anti-discrimination tariffs removed from March 1, until at least year-end, he added.The deals will unlock nearly $3bn 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 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 that 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.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.“Meanwhile, it’s difficult for Washington to criticise Carney for striking a beneficial trade deal when Trump himself just did so in October.”US President Donald Trump has also 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 eager 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 say the rapprochement 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.But if Ottawa took a more pragmatic and autonomous economic policy toward China, Beijing could point to it as evidence that US-led decoupling was neither inevitable nor universally accepted among America’s closest partners, he added.