Canada, China hit reset button on relations with tariff agreement

China and Canada have agreed to remove the triple-digit tariffs imposed on each other’s imports – a major thaw in relations after years of icy diplomatic and trade ties – as Canadian Prime Minister Mark Carney wrapped up his state visit in Beijing.Canada will remove the additional 100 per cent in tariffs it had levied on Chinese electric vehicle (EV) imports – imposed in 2024 following a similar move from the United States – while China will lower its tariffs on Canadian canola, Carney said on Friday.In place of the higher duties on EVs, Carney said, Canada will cap import volume and retain a preferential tariff rate of 6.1 per cent for shipments below the 49,000-unit ceiling.“In order for Canada to build our own competitive EV sector, we need to learn from innovative partners, access their supply chains and increase local demand,” Carney said at a press briefing after talks with President Xi Jinping.He added that by replacing the high tariffs with an import quota, it would help deliver the “full potential” of these partnerships and bring down costs for Canadians.“It’s expected that, within three years, this agreement will drive considerable Chinese investment in Canada’s auto sector, creating good careers in Canada and accelerating our progress towards a net-zero future,” Carney said.While a time frame for the 49,000-unit limit on EV imports was not disclosed, the amount roughly corresponds to shipments made from China to Canada in the year before the tariff increases, according to an official statement from the prime minister’s office.