Canada Reaches ‘Landmark’ Trade Deal With China. Carney is trying to reduce dependence on US
Canada’s prime minister is wagering that a renewed trade relationship with China is worth the risk of friction with Washington. During a visit to Beijing, Prime Minister Mark Carney announced what he called a “preliminary but landmark” agreement that will reopen Canada’s market to Chinese-made electric vehicles, rolling back tariffs that effectively blocked them starting in 2025.
Under the deal, Canada will allow up to 49,000 Chinese EVs per year to enter the country at a 6.1% tariff, with the quota rising to 70,000 vehicles by the fifth year. Carney said the arrangement would bring imports roughly back to pre-tariff levels, before Canada joined a U.S.-led effort to impose a 100% duty on Chinese EVs, according to Politico. In exchange, China will significantly reduce its retaliatory tariffs on Canadian canola, lowering combined duties from about 85% to roughly 15% by March 1.
China will also eliminate tariffs on several other Canadian exports, including lobster, crab, and peas, the CBC reports. The agreement comes as Carney and Chinese President Xi Jinping seek to stabilize a strained bilateral relationship, and as Ottawa looks to diversify trade away from an increasingly unpredictable United States under President Trump. Carney said ties with China have become “more predictable,” while emphasizing that Canada’s relationship with the U.S. remains “much deeper, much broader, and more multifaceted.” His government has set a goal of doubling trade with non-U.S. partners within 10 years, with a stronger focus on China and the Middle East.
The EV decision puts Canada at odds with both the United States and Mexico, which recently raised its tariff on Chinese electric vehicles to 50%. Lawmakers and labor unions in both the U.S. and Canada have warned that low-cost Chinese EVs could undermine North America’s auto industry. Ontario Premier Doug Ford echoed those concerns, urging Carney to keep tariffs in place unless Chinese automakers build vehicles in Canada and hire Canadian workers.
Carney countered that even with the new quotas, Chinese EVs would account for only a small share of Canada’s roughly 1.8 million annual vehicle sales. He also said China is expected to begin investing in Canada’s auto sector within three years, according to the AP. Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, told the CBC that he supports some of the agreement’s “guardrails,” including requirements that imported vehicles meet Canadian safety standards.
Still, Volpe said the deal conflicts with Carney’s broader push to “buy Canadian.” A member of Carney’s U.S.-Canada relations council, Volpe argued that every domestic sale matters as Canada works to strengthen its own manufacturing base amid ongoing trade tensions with the United States. “It’s much better to get that sale from a company that’s manufacturing here, buying supplies here, and employing Canadians here,” he said.
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