China and Canada announce tariffs relief after a high-stakes meeting

Chinese leader Xi Jinping and Canadian Prime Minister Mark Carney announced lower tariffs after an important meeting in Beijing, signaling a reset in relations between their countries.

Carney told reporters that China is expected to reduce the tax on Canadian canola oil from 85% to 15% by March 1, while Ottawa has agreed to impose a 6.1% tax on Chinese electric vehicles, the most preferred country rate.

The agreement is a step forward after years of tense relations and tit-for-tat taxes. Xi welcomed the “turnaround” in relations, but it’s also a win for Carney, who is the first Canadian leader to visit China in nearly a decade.

Following the uncertainty caused by Trump’s consecutive tariffs, Canada is trying to shift its trade away from the United States, its country’s largest trading partner.

The deal could also see more Chinese investment in Canada, right on America’s doorstep.

Carney himself appeared to allude to the fact that this was a result of Trump’s tariffs; This has now pushed one of the US’s key allies towards its biggest rival.

He told reporters that Canada’s relationship with China has been more “predictable” in recent months and that he finds talks with Beijing “realistic and respectful.”

He also made clear Ottawa does not agree with Beijing on everything, adding that in his discussions with Xi he made clear Canada’s “red lines”, including human rights, concerns over election interference and the need for “guardrails”.

Observers believe Carney’s visit could set an example for other countries around the world feeling the pain of Washington’s tariffs.

By contrast, Xi is trying to show that China is a stable global partner and is calling for more pragmatic relations that are, in Beijing’s words, “win-win” for all.

And it seems to work. South Korea’s president and Ireland’s prime minister have visited Beijing in recent weeks. The British Prime Minister and the German Chancellor are also expected to visit soon.

Carney said the “world is changing dramatically” and how Canada positions itself “will shape our future for decades to come.”

Earlier in his three-day visit, he said the Canada-China partnership was preparing the two countries for a “new world order.” He later added that the multilateral system had been “eroded or undermined, to put it politely.”

As Chinese and Canadian delegations sat in the Great Hall of the People on Friday, Xi said: “The healthy and stable development of China-Canada relations contributes to world peace, stability, development and prosperity.”

Tariffs have been a major sticking point between the two sides.

In 2024, Canada imposed a 100% tariff on Chinese electric vehicles, following similar restrictions in the United States.

Last year Beijing retaliated with tariffs on more than $2bn (£1.5bn) of Canadian farms and food products such as canola seeds and oil. As a result, China’s imports of Canadian goods fall by 10% in 2025.

Under the agreement reached on Friday, Canada will allow only 49,000 Chinese electric vehicles to enter the Canadian market at a tariff rate of 6.1%.

This limit comes in response to Canadian automakers’ fears about an influx of affordable Chinese EVs.

In addition to relief for canola producers, tariffs on Canadian lobsters, crabs and peas will also be reduced.

Although China is Canada’s second largest trading partner, it still lags far behind the United States in terms of volume.

Economic ties with China are becoming increasingly important to Carney. When he arrived in Beijing on Wednesday, he met with senior executives from leading Chinese companies, including an electric vehicle battery maker and an energy giant.

On Thursday, the two countries signed several agreements on energy and trade cooperation.

Colin Robertson, a former Canadian diplomat and vice president of the Canadian Global Affairs Institute, said the visit was a “reset of the relationship” that may be “modest in ambition” but “much more realistic about what we can reasonably achieve.”

The last Canadian Prime Minister to visit China was Justin Trudeau, who met with Xi in Beijing in 2017.

That visit came before relations soured in 2018 after Canada arrested Meng Wanzhou, chief financial officer of Chinese tech giant Huawei, at the request of the United States.

Days later, China arrested Canadian citizens Michael Kovrig and Michael Spavor on espionage charges; The move was a move that critics saw as retaliation for Meng’s arrest, but which China denied.

Meng and both Michaels were released in 2021.

Ahead of the Carney-Xi meeting, Michael Kovrig wrote to X that the visit should not only warm up ties but also be about “leverage management.”

Kovrig described Chinese negotiators as “extremely resourceful, calculating and always looking for leverage.”

“Therefore, involvement needs to be handled with discipline,” he wrote, adding that Carney should also advocate for Canadians imprisoned in China. According to Canadian media, there are about 100 of them.

Speaking to reporters, Carney made clear that Ottawa would take a “narrower, more specific” stance on countries that do not share the same values.

“We are very clear about where we cooperate, where we differ,” he said, adding that China’s allegations about self-ruled Taiwan and Hong Kong’s jailed pro-democracy figure Jimmy Lai had come up in “broad discussions”.

He said Canada and China have “different systems,” which limits the scope of their collaboration.

“But to have an effective relationship, we speak directly. We don’t hold a megaphone and do the conversation that way.”