Canada, China slash EV, canola tariffs in reset of ties

Canada and China struck an initial trade deal on Friday that will slash tariffs on electric vehicles and canola, as both nations promised to tear down trade barriers while forging new strategic ties during Prime Minister Mark Carney's visit.

The first Canadian prime minister to visit China since 2017, Carney is seeking to rebuild ties with his country's second-largest trading partner after the United States following months of diplomatic efforts.

Canada will initially allow in up to 49,000 Chinese electric vehicles at a tariff of 6.1% on most-favoured-nation terms, Carney said after talks with Chinese leaders including President Xi Jinping. 

That compares with the 100% tariff on Chinese electric vehicles imposed under former Prime Minister Justin Trudeau in 2024, following similar U.S. penalties. In 2023, China exported 41,678 EVs to Canada.

"This is a return to levels prior to recent trade frictions, but under an agreement that promises much more for Canadians," Carney told reporters. He later said the quota would gradually increase, reaching about 70,000 vehicles in five years.

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Relaxing EV tariffs diverged from U.S. policy, and some members of U.S. President Donald Trump's cabinet criticised the decision ahead of an expected review of the U.S.-Canada-Mexico trade deal.

But Trump himself expressed support for Carney. "That's what he should be doing. It's a good thing for him to sign a trade deal. If you can get a deal with China, you should do that," Trump told reporters at the White House.

The deals will unlock nearly $3 billion in export orders for Canadian farmers, fish harvesters and processors, Carney said. 

China's Commerce Ministry said in a statement China was adjusting anti-dumping measures on canola as well as anti-discrimination measures on some Canadian agricultural and aquatic products in response to Canada lowering EV tariffs.

Carney added that Xi committed to visa-free access for Canadians travelling to China, but did not give details.

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