Canada and China strike EV and canola trade deal amid US tensions

Friday 16 January 2026 - 17:50

By: Dakir Madiha

Canada and China strike EV and canola trade deal amid US tensions

Canadian Prime Minister Mark Carney and Chinese President Xi Jinping unveiled a landmark trade agreement in Beijing, slashing tariffs on Chinese electric vehicles in exchange for eased duties on Canadian agricultural goods. This pact signals Ottawa's pivot away from heavy reliance on the United States, reshaping its commercial landscape.

Under the deal, Canada will allow up to 49,000 Chinese EVs to enter at a reduced 6.1% tariff, down from the 100% rate set by former Prime Minister Justin Trudeau in 2024. The quota will rise to 70,000 over five years. In return, China will cut duties on Canadian canola seeds from around 84% to 15% by March 1, with additional exemptions for canola meal, lobsters, crabs, and peas through year's end at least.

The summit at the Great Hall of the People marked the first visit by a Canadian prime minister to China since 2017, thawing ties strained since 2018. That year, Canada detained Huawei executive Meng Wanzhou at Washington's behest, prompting China to jail two Canadians on spying charges; all were freed by 2021. Xi referenced their prior October meeting at an ASEAN summit in South Korea as opening a fresh chapter, while Carney called the accord preliminary yet historic, tailored to evolving global realities.

Economically, the agreement promises to unlock nearly $3 billion in export orders for Canadian farmers, fishers, and processors. It comes as both nations grapple with U.S. tariffs under President Donald Trump, whose administration has floated Canada as a potential 51st state. Carney aims to double non-U.S. exports over the next decade and described China as a more predictable partner lately.

Ontario Premier Doug Ford had urged caution against easing EV tariffs, warning of cheap Chinese imports flooding the market. Carney countered that the 49,000-vehicle cap equals under 3% of Canada's 1.8 million annual car sales and expects substantial Chinese investments in its auto sector within three years. He also raised human rights concerns with Xi, stressing a values-based realism that upholds democracy, territorial integrity, and self-determination while engaging the world as it is.