In a significant diplomatic breakthrough, Canada and China have announced a comprehensive trade agreement aimed at easing months of economic tensions. The deal, unveiled by Canadian Prime Minister Mark Carney during his visit to Beijing, centers on major tariff reductions for electric vehicles (EVs) and key agricultural products like canola.
The EV component marks a dramatic policy reversal. Canada will now permit up to 49,000 Chinese-made electric vehicles to enter its market at a sharply reduced tariff rate of 6.1% on most-favoured-nation terms. This is a stark departure from the 100% tariff imposed by former Prime Minister Justin Trudeau in 2024, which was aligned with similar U.S. actions. In 2023, prior to the high tariffs, China exported 41,678 EVs to Canada. Prime Minister Carney framed the shift as a strategic necessity, stating, "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." He predicted the move would spur "considerable" Chinese investment in Canada's auto industry and create quality jobs.
On the agricultural front, China has agreed to substantially lower tariffs on Canadian canola. By March 1, the combined tariff rate on Canadian canola seed is expected to drop to approximately 15%, down from a punishing combined rate of 84%. This move is poised to reopen a critical export market valued at C$4 billion for Canadian farmers. Furthermore, China will suspend anti-discrimination duties on other Canadian products including canola meal, lobsters, crabs, and peas from March 1 until at least the end of the year.
The agreement follows a period of severe trade disruption. In retaliation for Canada's 2024 EV tariffs, China had imposed tariffs on over $2.6 billion worth of Canadian farm and food products, contributing to a 10.4% slump in China's imports of Canadian goods in 2025. The canola dispute alone had frozen trade worth C$4.9 billion ($3.5 billion) from 2024. Prime Minister Carney estimated the new deals could unlock nearly $3 billion in export orders for Canadian producers.
The reset occurs against a backdrop of strained Canada-U.S. relations under President Donald Trump, prompting Ottawa to actively diversify its trade partnerships. When questioned if China was becoming a more predictable partner than the U.S., Carney noted, "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."
