Canada and China Move to Reset Trade Ties With Major Cuts to EV and Canola Tariffs

Canada and China have reached an initial trade agreement aimed at easing years of economic tension by significantly reducing tariffs on electric vehicles (EVs) and Canadian agricultural products, particularly canola. The announcement came during Canadian Prime Minister Mark Carney’s visit to Beijing — the first by a Canadian leader since 2017 — as both countries signalled a desire to rebuild strained relations and reopen key trade channels.

Key Elements of the Agreement

• Electric Vehicles:
  Canada will permit the import of up to 49,000 Chinese-built EVs annually at a 6.1% tariff, restoring the rate that existed before Ottawa imposed a 100% tariff in 2024. The quota is expected to rise gradually, reaching approximately 70,000 vehicles within five years.
• Canola and Agricultural Products:
  China will reduce its canola seed tariff from 84% to about 15% by March 1, 2026 — a major shift following retaliatory measures imposed after Canada’s earlier EV tariffs. Tariffs on canola meal, lobsters, crabs, and peas will also be suspended until at least the end of 2026.

Context and Background

The agreement marks a turning point after years of escalating trade friction. In 2024, Canada sharply increased tariffs on Chinese EVs, citing concerns about subsidized competition and risks to domestic auto manufacturing. China responded with sweeping tariffs on Canadian farm exports, contributing to a 10.4% decline in Chinese imports of Canadian goods in 2025.

Prime Minister Carney framed the new deal as a strategic reset, arguing that Canada must engage with innovative partners to strengthen its own EV sector and supply chain. Chinese leaders, including President Xi Jinping, welcomed the shift as part of a broader effort to stabilize bilateral relations.

Reactions

• Support:
  Clean energy advocates and trade analysts praised the agreement for improving EV affordability, encouraging investment, and supporting Canada’s transition toward a net‑zero economy.
• Criticism:
  Ontario Premier Doug Ford and some auto‑sector stakeholders warned that the influx of lower‑cost Chinese EVs could undermine Canadian manufacturing without firm guarantees of reciprocal investment.

Economic Impact

Canadian officials estimate that the tariff reductions will unlock nearly $3 billion in export opportunities for farmers, fishers, and processors, while also encouraging Chinese investment in Canada’s EV supply chain and clean‑energy industries.