Canadian PM Carney strikes a ‘preliminary’ Canada-China deal to cut tariffs, open door to Chinese Electrical Vehicles (EVs).
The Liberal government has reached a deal with Beijing to allow tens of thousands of Chinese electric vehicles into the domestic market in exchange for dropping duties on canola products, Prime Minister Mark Carney said Friday.
Canada’s Prime Minister Mark Carney announced a deal with China’s Xi Jinping on Friday to reduce tariffs on each country’s products after the two leaders met in Beijing.
“Canada and China have reached a preliminary but landmark trade agreement to remove trade barriers and reduce tariffs,” Carney told a news conference in the Chinese capital.
Notably, it is the first Canadian prime minister to visit since 2017 where Carney sought to rebuild ties with his country’s second-largest trading partner after the United States following months of diplomatic efforts.
“By March the first, Canada expects that China will lower tariffs on Canadian canola seed. The combined rate of approximately 15 percent-this change represents a significant drop from the current combined tariff levels of 84 percent.”
Canada to import nearly 50,000 Chinese EVs at preferential tariff rates:
Canada will allow 49,000 Chinese electric vehicles to be imported under new, preferential tariff rates, Carney said.
“Canada has agreed to allow up to 49,000 Chinese electric vehicles into the Canadian market, with the most favoured nation tariff rate of 6.1 percent,” Carney told reporters.
“This is a return to levels prior to recent trade frictions, but under an agreement that promises much more for Canadians,” He added.
“This is a return to the levels that existed prior to recent trade frictions.”
The figure compares with a 100 percent tariff on Chinese electric vehicles imposed by the government of former Canadian Prime Minister Justin Trudeau in 2024, following similar US penalties.
In 2023, China exported 41,678 EVs to Canada.
Trudeau justified the tariff on the grounds of an unfair global market edge for Chinese manufacturers benefiting from state subsidies, a scenario threatening to 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.
However, he did not specify a time period regarding EVs’ deal.
EVs-Canola deal opens new pathways, signaling reset in bilateral trade relations
Canada and China have reached an electric vehicles (EV) and canola tariff quota agreement, opening a window for Chinese EVs to expand into the North American market.
Canada anticipates that starting March 1, 2026, Canadian-produced canola meal, lobsters, crabs, and peas will be exempt from related anti-discrimination tariffs at least through the end of this year.
These outcomes will collectively help Canadian workers and businesses unlock nearly $3 billion in export orders, enabling them to fully tap into the vast potential of the Chinese market, the Canadian government said.
Canada imposed a 100% additional tariff on all EVs manufactured in China starting October 1, 2024, following the US government’s move at the time.
Prior to the additional tariff, EVs produced in China faced a 6.1% tariff when exported to Canada.
After the additional tariff took effect, their rate rose to 106.1%.
This effectively amounts to Canada closing its market to Chinese EV manufacturers.
