Canada and China have agreed to reduce tariffs on electric vehicles (EVs) and canola as part of a new trade arrangement intended to restore commercial relations between the two countries, reported Reuters.
The agreement, announced during Canadian Prime Minister Mark Carney’s visit to Beijing, allows up to 49,000 Chinese-made EVs into Canada annually at a tariff rate of 6.1%, replacing a previous 100% levy introduced in 2024 under former Prime Minister Justin Trudeau.
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China is set to lower tariffs on Canadian canola seed from the current 84% to around 15% by 1 March, and will remove anti-discrimination duties on other Canadian agricultural and aquatic products, including crabs, lobsters, peas and canola meal for at least the remainder of the year.
Carney told reporters: “This is a return to levels prior to recent trade frictions, but under an agreement that promises much more for Canadians.”
Carney, the first Canadian prime minister to visit China since 2017, emphasised that the new quota for Chinese EVs would rise gradually, reaching approximately 70,000 annually within five years.
The move diverges from US policy, which continues to apply high tariffs on Chinese EVs.
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By GlobalDataSome members of President Donald Trump’s administration criticised Canada’s decision ahead of an upcoming review of the US-Canada-Mexico trade agreement; however, Trump has expressed support for Carney’s approach.
Trump told reporters at the White House: “That’s what he should be doing. It’s a good thing for him to sign a trade deal. If you can get a deal with China, you should do that.”
Ontario Premier Doug Ford has condemned the deal due to its potential impact on local automotive manufacturing.
In retaliation for earlier Canadian tariffs, China had imposed duties on more than C$2.6bn ($1.86bn) worth of Canadian farm products, contributing to a 10.4% fall in China’s imports from Canada in 2025.
The reduction in import barriers is expected to unlock nearly C$3bn ($2.2bn) in export orders for Canadian producers of agricultural and seafood goods.
Chinese commerce officials confirmed they are adjusting anti-dumping measures on canola as well as removing certain trade restrictions in response to Canada’s lowering of EV tariffs.
Tesla and brands under Zhejiang Geely Holding Group are positioned as early beneficiaries of relaxed import rules due to their existing North American certifications, reported Bloomberg.
In 2023, Tesla imported over 44,000 EVs into Canada before the higher tariff was introduced.
As part of the updated agreement, Transport Canada will approve new Chinese EV models within eight weeks.
Half of the annual import quota will be allocated for vehicles priced at C$35,000 ($25,230) or less by 2030 to broaden consumer options and encourage lower-cost imports.
While BYD currently holds minimal market share in Canada, it stands to benefit from reduced import duties.
In addition to changes in trade policy, Carney noted that President Xi Jinping committed to granting visa-free access for Canadians travelling to China and agreed to restarting high-level economic dialogue between the two governments.
Both sides intend to enhance collaboration in the agriculture, oil and gas sectors, and green energy initiatives.
Canada also plans sizeable expansions in LNG exports targeting Asia and aims to double its energy grid capacity over the next fifteen years with potential Chinese investment participation.
Discussions between Carney and Xi covered topics relating to broader geopolitical interests, such as Greenland.
Political analysts have suggested that improved relations between Ottawa and Beijing could influence dynamics amid ongoing US-China competition.
