Canada and China agree to slash tariffs on EVs and farm exports after PM Mark Carney’s Beijing summit with Xi Jinping, marking a trade reset amid U.S. tensions and diversification efforts.
Canada Slashes Chinese EV Tariffs in Landmark Beijing Deal with Xi:
In a bold move breaking from U.S. allies, Canada has agreed to slash its 100% tariff on Chinese electric vehicles to 6.1% for up to 49,000 units annually, in exchange for China reducing duties on Canadian canola and other farm products. Announced on January 16, 2026, following high-level talks in Beijing between Prime Minister Mark Carney and President Xi Jinping, the deal marks the first Canadian prime ministerial visit to China in eight years and signals a reset in strained bilateral ties. This agreement could unlock billions in trade but raises concerns over jobs, security, and North American supply chains as Canada navigates U.S. tariffs under President Donald Trump.
Beijing Breakthrough: Carney Secures Landmark Trade Reset with China:
Prime Minister Mark Carney arrived in Beijing on January 14, 2026, for a four-day visit aimed at rebuilding ties with China, Canada’s second-largest trading partner. On January 16, following meetings with President Xi Jinping at the Great Hall of the People, Carney announced a preliminary agreement-in-principle to ease trade barriers.
The deal allows up to 49,000 Chinese-made electric vehicles to enter Canada annually at a 6.1% most-favoured-nation tariff rate, a sharp drop from the 100% surtax imposed in 2024. This volume matches pre-friction levels from 2023-2024, representing less than 3% of Canada’s new vehicle market. In return, China will lower tariffs on Canadian canola seed to a combined rate of about 15%-down from around 85%-in a market valued at $4 billion for Canadian producers. Anti-dumping duties on canola meal, lobsters, crabs, and peas will be lifted from March 1 until at least December 31, 2026.
Carney described the pact as part of a “new strategic partnership” focused on energy, agri-food, and trade. Additional measures include addressing barriers in beef and pet food sectors, and fostering joint ventures in clean energy and technology. The announcement followed a welcoming ceremony and discussions with Premier Li Qiang and Zhao Leji, chairman of the National People’s Congress standing committee.
By January 17, reactions poured in, with Canadian officials projecting nearly $3 billion in new export orders. The deal is set to take effect on March 1, with monitoring to ensure compliance.
Canola Wars to EV Deals: The Dramatic Arc of Canada-China Relations:
Canada-China relations have been fraught since 2018, when Canada arrested Huawei executive Meng Wanzhou at U.S. request, prompting China to detain Canadians Michael Kovrig and Michael Spavor for over 1,000 days. Tensions escalated with China’s 2019 tariffs on Canadian canola amid the Huawei dispute, costing farmers billions. In 2024, Canada aligned with the U.S. by imposing 100% tariffs on Chinese EVs and steel, citing unfair subsidies and overcapacity.
The backdrop includes U.S. President Donald Trump’s return in 2025, with threats of broad tariffs on Canadian goods. Elected in October 2025, Carney campaigned on diversifying trade to reduce reliance on the U.S, where 75% of Canadian exports go. China’s economy, as Canada’s top agri-food market ($13.4 billion in 2024), offers a counterbalance.
This visit, the first by a Canadian PM since 2017, builds on preparatory talks in 2025, including ministerial meetings. The agreement aims for a 50% increase in Canadian exports to China by 2030, emphasizing mutual benefits in a divided global landscape. Its significance lies in Canada’s pivot toward pragmatic engagement with China, potentially attracting investments in EV supply chains while risking friction with Washington.