BYD Sealion 5 plug-in hybrid SUV on display at a launch event by the Chinese electric car manufacturer in Muldersdrift, South Africa on December 4, 2025.
Nqobile Doldra | Reuters
Canada and China signed their first trade agreement on Friday, lowering tariffs on electric vehicles and rapeseed, with the two countries pledging to remove trade barriers and forge a new strategic relationship during Prime Minister Mark Carney’s visit.
Carney, Canada’s first prime minister to visit China since 2017, is seeking to rebuild relations with China’s second-largest trading partner after the United States after months of diplomatic efforts.
Following talks with Chinese leaders, including President Xi Jinping, Carney said Canada will initially allow imports of up to 49,000 Chinese-made electric vehicles at a 6.1 per cent tariff under most-favored-nation conditions.
This compares to the 100% tariff imposed on electric vehicles in China in 2024 under former Prime Minister Justin Trudeau, following similar penalties in the United States. In 2023, China exported 41,678 EVs to Canada.
“This is back to where we were before the recent trade tensions, but with an agreement that promises even more for Canadians,” Carney told reporters. After that, he said the quota would gradually increase, reaching about 70,000 units over five years.
“For Canada to build its own competitive EV sector, we need to learn from innovative partners, access their supply chains and increase local demand,” Carney said, bucking Trudeau’s rationale that tariffs are needed to protect domestic producers from subsidized Chinese manufacturers.
Reducing EV tariffs is a departure from U.S. policy, and some members of President Donald Trump’s cabinet criticized the decision ahead of an expected review of the U.S.-Canada-Mexico trade agreement.
But Trump himself expressed support for Carney. “That’s what he should do. It’s good for him to sign trade deals. If he can get a deal with China, he should do it,” Trump told reporters at the White House.
Agricultural and food partnerships
Premier Doug Ford of Ontario, Canada’s main auto-producing province, condemned the deal.
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In retaliation for Trudeau’s tariffs, China imposed tariffs on more than $2.6 billion of Canadian agricultural products and food, including canola oil and meal, in March, followed by tariffs on canola seed in August.
As a result, China’s imports of Canadian products will decrease by 10.4% in 2025.
Carney said that under the new agreement, Canada expects China to lower its tariffs on canola seed to a total of about 15 per cent from the current 84 per cent by March 1.
Canada also expects non-discriminatory tariffs on canola meal, lobster, crab and peas to be lifted from March 1 until at least the end of the year, he added.
Canadian canola futures rose.
Carney said the deal will give Canadian farmers, fish harvesters and processors access to nearly $3 billion in export orders.
China’s Ministry of Commerce said in a statement that in response to Canada’s EV tariff reduction, China is adjusting anti-dumping measures for canola, as well as anti-discrimination measures for some agricultural and fishery products in Canada.
Carney added that Xi promised Canadians traveling to China would be visa-free, but did not go into details.
In a statement released by China’s state-run Xinhua News Agency, the two countries pledged to resume high-level economic and financial dialogue, promote trade and investment, and strengthen cooperation in agriculture, oil, gas and green energy.
Carney said Canada will double its energy grid over the next 15 years, adding there are opportunities to partner with China on investments including offshore wind.
He also said Canada is expanding LNG exports to Asia, with the country producing 50 million tonnes of LNG each year, all destined for Asian markets by 2030.
Carney says China is ‘more predictable’
“Given the current complexity of the Canada-U.S. trade relationship, it is not surprising that the Carney administration is keen to improve bilateral trade and investment relations with Beijing, which is a huge market for Canadian farmers,” said Even Rogers Pei of Beijing-based Trivium China.
President Trump has imposed tariffs on some Canadian products and suggested the longtime U.S. ally could become Canada’s 51st province.
China, which has also been hit by President Trump’s tariffs, is keen to work with G7 countries, where the US has traditionally held influence.
Asked if China is a more predictable and reliable partner than the United States, Carney said, “In terms of the evolution of our relationship with China in recent months, it’s been more predictable and you’ll see the results come from that.”
Carney also said he had discussed Greenland with Xi. “We found a lot of agreement on that,” he said.
President Trump has revived Denmark’s claim to the semi-autonomous territory in recent days, as North Atlantic Treaty Organization (NATO) countries scramble to counter U.S. criticism that they are not doing enough to protect Greenland.
Analysts said that while Ottawa is not expected to dramatically move away from Washington, Canada and China’s proximity could reshape the political and economic landscape in which the Sino-American conflict plays out.
“Canada is a core ally of the United States and is deeply integrated into the U.S. security and intelligence framework,” said Sun Chenghao, a researcher at Tsinghua University’s Center for International Security Strategy.
“Therefore, it is very unlikely to strategically realign away from Washington.”
