Canada, China slash EV, canola tariffs in reset of ties

 

Canada, China slash EV, canola tariffs in reset of ties

Canada, China slash EV

"For Canada to build its own competitive EV sector, we will need to learn from innovative partners," Carney says

Canada and China have struck an initial trade deal that will slash tariffs on electric vehicles and canola, Prime Minister Mark Carney said today, as both nations promised to tear down trade barriers while forging new strategic ties.

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

Canada will initially allow in up to 49,000 Chinese electric vehicles at a tariff of 6.1% on most-favoured nation terms, Carney said after talks with Chinese leaders, including President Xi Jinping. He did not specify a time period.

That compares with the 100% tariff on Chinese electric vehicles imposed by the government of former Prime Minister Justin Trudeau in 2024, following similar US penalties. In 2023, China exported 41,678 EVs to Canada.

"This is a return to levels prior to recent trade frictions, but under an agreement that promises much more for Canadians," Carney told reporters in Beijing.

Trudeau had justified his tariff on the grounds that there was an unfair global market edge for Chinese manufacturers benefiting from state subsidies, a scenario that was threatening Canada's domestic industry.

"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," Carney said.

He pointed to a stronger partnership with China in clean energy storage and production, driving new investments.

Carney said he expected the EV pact would drive "considerable" Chinese investment into Canada's auto sector, create good careers in Canada, and speed it towards a net-zero future.

AGRI-FOOD PARTNERSHIP

Last March, in retaliation for Trudeau's tariffs, China levied tariffs on more than $2.6 billion of Canadian farm and food products such as canola oil and meal, followed by tariffs on canola seed in August.

That led to a slump of 10.4% in China's 2025 imports of Canadian goods.

Under the new deal, Carney said, Canada expects China to lower tariffs on its canola seed by March 1, to a combined rate of about 15%.

"This change represents a significant drop from current combined tariff levels of 84%," he said, adding that China was a $4 billion canola seed market for Canada.

Canada also expects its canola meal, lobsters, crabs, and peas to have anti-discrimination tariffs removed from March 1, until at least year-end, he added.

The deals will unlock nearly $3 billion in export orders for Canadian farmers, fish harvesters, and processors, Carney said.

In a joint statement announced by China's state-run Xinhua news agency, the two countries pledged to restart high-level economic and financial dialogue, boost two-way 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 that there are opportunities for Chinese partnership in investments, including offshore wind.

He also said Canada was scaling up its LNG exports to Asia and will produce 50 million tonnes of LNG each year - all destined for Asian markets by 2030.

CHINA 'MORE PREDICTABLE'

"Given current complexities in Canada's trade relationship with the US, it's no surprise that Carney's government is keen to improve the bilateral trade and investment relationship with Beijing, which represents a massive market for Canadian farmers," said Beijing-based Trivium China's Even Rogers Pay.

"Meanwhile, it's difficult for Washington to criticise Carney for striking a beneficial trade deal when Trump himself just did so in October."

US President Donald Trump has also imposed tariffs on some Canadian goods and suggested the longtime US ally could become his country's 51st state.

China, similarly hit by Trump's tariffs, is also keen to cooperate with a Group of Seven nation in a traditional sphere of US influence.

"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," Carney said when asked if China was a more predictable and reliable partner than the US.

Carney also said he had discussions with Xi about Greenland. "I found much alignment of views in that regard," he said.

Trump has in recent days revived his claim to the semi-autonomous Danish territory as NATO members scrambled to counter US criticism that Greenland is under-protected.

SINO-US RIVALRY

Analysts say the rapprochement could reshape the political and economic context in which Sino-US rivalry unfolds, although Ottawa is not expected to dramatically pivot away from Washington.

"Canada is a core US ally and deeply embedded in American security and intelligence frameworks," said Sun Chenghao, a fellow at Tsinghua University's Centre for International Security and Strategy.

"It is therefore very unlikely to realign strategically away from Washington."