Canada strikes landmark trade deal with China, cutting EV tariffs and boosting farm exports

Canada has unveiled a significant new trade deal with China that marks a notable shift in its economic and diplomatic strategy.

Announced on January 16 during Canadian Prime Minister Mark Carney’s official visit to Beijing, the deal will dramatically reduce tariffs on Chinese electric vehicles (EVs) and expand market access for Canadian agricultural products.

Under the terms of the agreement, Canada will allow up to 49,000 Chinese-made EVs to enter the Canadian market annually at a most-favoured-nation tariff rate of 6.1 %, a steep drop from the 100 % duty imposed in 2024. Ottawa says the quota reflects pre-conflict import volumes and is designed to support a managed, predictable entry of affordable EVs, with over half expected to be priced under $35,000 CAD by 2030.

In return, China has agreed to slash tariffs on Canadian canola seed from around 84 % to roughly 15 % by March 1, and eliminate anti-discrimination tariffs on canola meal, lobsters, peas and crabs through the end of the year. The changes are projected to open up nearly $3bn in new export opportunities for Canadian farmers and seafood producers.

The deal also touches on broader cooperation, with both governments expressing interest in collaboration on clean energy, technology investment, and supply chain development. Canada hopes the agreement will spur joint ventures and manufacturing jobs in its domestic EV sector.

While the move is seen by Ottawa as a pragmatic reset of bilateral relations and a way to diversify trade beyond the United States, critics warn it could disrupt North American auto supply chains and expose Canadian industries to heightened competition. U.S. officials called the EV tariff reduction “problematic,” underscoring lingering geopolitical tensions even as trade ties are rekindled.