Canada Slashes EV, Canola Tariffs In Reset Of Ties For China

Beijing : Canada and China signed an initial trade deal Friday that will lower tariffs on electric vehicles and canola; Both countries pledged to forge new strategic ties while removing trade barriers during Prime Minister Mark Carney’s visit.

Carney, the first Canadian prime minister to visit China since 2017, is trying to rebuild ties with his country’s second-largest trading partner after the United States after months of diplomatic efforts.

After a meeting with Chinese leaders, including President Xi Jinping, Carney said Canada would initially allow up to 49,000 Chinese electric vehicles at a 6.1 per cent tariff on most-favored country terms.

This compares with a 100% tariff on Chinese electric vehicles imposed in 2024 under former Prime Minister Justin Trudeau, following similar penalties by the United States. In 2023, China exported 41,678 electric vehicles to Canada.

“This is a return to the levels before the recent trade frictions, but under a deal that promises much more for Canadians,” Carney told reporters. he said. He then said the quota would gradually increase and reach about 70,000 vehicles within five years.

“For Canada to build its own competitive EV sector, we will need to learn from innovative partners, access their supply chains and increase domestic demand,” Carney said, moving away from Trudeau’s reasoning that tariffs were needed to protect domestic manufacturers against subsidized Chinese manufacturers.

Relaxing EV tariffs deviated from US policy, and some members of US President Donald Trump’s cabinet criticized the decision ahead of an expected review of the US-Canada-Mexico trade agreement.

However, Trump himself expressed his support for Carney. “That’s what he needs to do. It’s a good thing for him to sign a trade deal. If you can make a deal with China, you should do that,” Trump told reporters at the White House.

AGRICULTURE-FOOD PARTNERSHIP

Premier Doug Ford of Ontario, Canada’s main auto-manufacturing region, condemned the deal.

“The federal government is inviting a flood of cheap Chinese-made electric vehicles with no guarantee of equal or immediate investment in the Canadian economy, automotive sector or supply chain,” he said in a post on X.

In retaliation for Trudeau’s tariffs, China imposed duties on more than $2.6 billion of Canadian farm and food products such as canola oil and meal in March, and then imposed tariffs on canola seed in August.

This has led to a 10.4% decline in Chinese imports of Canadian goods in 2025.

Under the new agreement, Canada expects China to reduce tariffs on canola seed to about 15% from the current 84% by March 1, Carney said.

He added that Canada also expects to eliminate anti-discrimination tariffs on canola meal, lobster, crab and peas from March 1 until at least the end of the year.

Canadian canola futures rose.

Carney said the deals would unlock about $3 billion in export orders for Canadian farmers, fish harvesters and processors.

China has adjusted anti-dumping measures on canola, as well as anti-discrimination measures on some Canadian agricultural and aquatic products, in response to Canada lowering EV tariffs, China’s Ministry of Commerce said in a statement.

Carney added that Xi has pledged visa-free access for Canadians traveling to China, but did not provide details.

In a statement carried by China’s state-run Xinhua news agency, the two countries vowed to restart high-level economic and financial dialogue, increase trade and investment and strengthen cooperation in agriculture, oil, gas and green energy.

Carney said Canada will double its energy network over the next 15 years and there are opportunities for Chinese partnerships in investments including offshore wind.

He also said that Canada is increasing LNG exports to Asia and will produce 50 million tonnes of LNG every year, all of which will be sent to Asian markets by 2030.

CARNEY SAYS CHINA IS ‘MORE PREDICTABLE’

“Given the current complexities in Canada’s trade relations with the United States, it is not surprising that the Carney government is eager to improve the bilateral trade and investment relationship with Beijing, which represents a large market for Canadian farmers,” said Even Rogers Pay of Beijing-based Trivium China.

Trump has imposed tariffs on some Canadian goods and suggested that Canada, a long-time U.S. ally, could become his country’s 51st state.

Similarly affected by Trump’s tariffs, China is willing to cooperate with the Group of Seven in the US’s traditional sphere of influence.

Asked if China is a more predictable and reliable partner than the United States, Carney said, “Looking at the direction of our relationship with China in recent months, it’s more predictable and you’re seeing the results from that.”

Carney also said he met with Xi on Greenland. “I found a lot of agreement on this issue,” he said.

Trump has revived his claim over the semi-autonomous Danish territory in recent days, at a time when NATO members are trying to counter US criticism that Greenland is not adequately protected.

The rapprochement between Canada and China could reshape the political and economic context in which the Sino-U.S. rivalry emerges, but Ottawa is not expected to move dramatically away from Washington, analysts said.

“Canada is one of the core allies of the United States and is deeply embedded in American security and intelligence frameworks,” said Sun Chenghao of Tsinghua University’s Center for International Security and Strategy.

“Therefore, strategically moving away from Washington is unlikely.”