The Liberal government has reached a deal with Beijing to slash tariffs on a set number of Chinese electric vehicles in exchange for China dropping duties on agriculture products, Prime Minister Mark Carney said Friday.
It marks the prime minister’s first deal on trade since taking office last year and a de-escalation in tensions with a country the Liberal government had, in recent years, branded a disruptive power.
Carney described it as a "preliminary but landmark" agreement to remove trade barriers and reduce tariffs, part of a broader strategic partnership with China.
"It's a partnership that reflects the world as it is today, with an engagement that is realistic, respectful and interest-based," Carney said at a news conference in Beijing.
Carney said Ottawa expects Beijing to drop canola seed duties to 15 per cent from 84 per cent by March 1, and called that "enormous progress."
Canadian canola meal, lobsters, crabs and peas will no longer be subject to Chinese "anti-discrimination" tariffs from March to at least the end of the year. There was no mention of canola oil, which is subject to a 100 per cent tariff.
In return, up to 49,000 Chinese electric vehicles will be allowed into the Canadian market each year at a 6.1 per cent tariff instead of the current 100 per cent tariff.
By 2030, half of those imported vehicles will cost less than $35,000 — a measure that Carney said will ensure EVs are more affordable for Canadians.
He added the 49,000 vehicles represents approximately the number imported from China in 2023, before the tariffs, and is less than three per cent of the Canadian domestic auto market.
The pact comes just hours after Carney met with President Xi Jinping, ending a multi-year trade dispute that began when the previous Liberal government levied EV tariffs to protect Canada’s auto sector.
In late 2024, Ottawa followed moves by former U.S. president Joe Biden and the European Union to counter China’s rapidly growing electric vehicle industry.
Former prime minister Justin Trudeau’s government imposed 100 per cent tariffs on Chinese electric vehicles, arguing the prospect of dumping cheap, heavily subsidized EVs constituted a threat to the North American auto sector.
China responded in March 2025 with a 100 per cent tariff on Canadian canola oil, peas and other products, along with 25 per cent on pork and seafood products such as lobster.
The move halted exports of canola oil, strangled exports of canola meal and peas and throttled pork as well.
That was followed by a levy of almost 76 per cent on Canadian canola seed in August that year, which ratcheted up pressure on Ottawa from the Prairies to ease the escalating trade tensions.
China's anti-dumping investigation into canola seeds was set to wrap up in March.
Canada is the top global exporter of canola and China is the industry’s second-largest market after the U.S.
Ottawa had also slapped a 25 per cent import tax on Chinese steel and aluminum in October 2024.
Greg Cherewyk, president of Pulse Canada, was in Beijing as part of the Canadian delegation and said the deal was welcome news.
Tariffs had effectively stopped all shipments of Canadian peas to China, the world's largest market, and Cherewyk said Canadian yellow peas worth about $700 million a year were displaced by Russian products.
"It was really important that this didn't last as long as we had feared it would last, into the years. It was resolved in what really amounts to a short period of time," he said, adding that the timing is ideal for farmers in Canada to make seeding decisions.
Just a year ago during the spring election, Carney described China as the biggest security threat facing Canada. Speaking to media Friday, his answer to a reporter's question was less clear-cut.
"The security landscape continues to change, and in a world that's more dangerous and divided, we face many threats," Carney replied when asked by a reporter. "You manage the threats through engagement."
The deal also comes as the Liberal government seeks to double non-U.S. exports by 2030 — and boost them by 50 per cent to China by that date as well.
Carney said he raised human rights in the meeting with Xi, and said Canada has a "value-based realism" to its approach.
"We fundamentally stand up for human rights, for democracy, territorial integrity, rights to self-determination," he said. "We take the world as it is, not as we wish it to be."
Carney and Xi met in the fall on the sidelines of the Asia-Pacific Economic Cooperation forum in South Korea. It marked the first official meeting between the leaders of Canada and China since 2017.
On Friday, Xi described that as a "turnaround" in bilateral relations.
In the wake of that key meeting last fall, both leaders directed their officials to work on resolving lasting trade irritants.
Saskatchewan Premier Scott Moe travelled to China for some of the top-level meetings — a key priority for him since the tariffs have been punishing a major Prairie crop. His province makes up for just over half of Canada’s total canola production.
Moe also travelled to China in September alongside federal officials, hoping to resolve the dispute.
Ontario Premier Doug Ford has maintained the EV tariffs should remain unless China opens an EV factory in Ontario and hires unionized Canadian workers.
Carney said in French that Canada expects engagement on domestic investment, and noted the future of the auto industry is in electric vehicles.
