Prime Minister Mark Carney meets with Chinese President Xi Jinping at the Great Hall of the People in Beijing on Friday.Sean Kilpatrick/Reuters
Prime Minister Mark Carney reached a deal with China to allow nearly 50,000 Chinese-made electric vehicles into Canada at a low tariff rate in return for big reductions in Beijing’s levies on canola seed and a promised elimination of its tariffs on a host of other products.
The announcement on Friday marks a break with the United States in how it treats Chinese electric vehicles by removing a tariff both countries enacted in 2024.
This brings about a truce in a painful trade war between Ottawa and Beijing as the Prime Minister seeks bigger overseas export markets and new foreign investment to offset the economic damage caused by U.S. President Donald Trump’s protectionist tariffs.
At the same time, the deal raises the prospect that Canada may be putting itself offside of Mr. Trump’s tough-on-China agenda, which the President expects allies to follow.
However, Mr. Trump did not immediately criticize Mr. Carney’s deal.
“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,” Mr. Trump told reporters at the White House.
Prior to the President’s remarks, U.S. Trade Representative Jamieson Greer said the Canadian government’s decision to allow Chinese electric vehicles at a low tariff rate is “problematic” and that Canada may come to regret the decision.
“I think in the long run, they’re not going to like having made that deal,” Mr. Greer told CNBC on Friday.
Canada’s trade deal with the United States and Mexico is up for review this year.
Mr. Carney announced the deal with Beijing after several hours of meetings with Chinese President Xi Jinping during his first trip to China as Prime Minister.
China’s Ministry of Commerce later posted statements online that are consistent with Mr. Carney’s description of the deal. The statements said the two countries have agreed to work together in a wide range of areas, such as electric vehicles, energy and agriculture, with economic and trade co-operation expected to enter a fast-track of development.
Ottawa imposed 100-per-cent tariffs on Chinese-made EVs in 2024, and Beijing later responded with retaliatory levies on seafood and agricultural products.
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The Prime Minister said this is the first fruit of a new “strategic partnership” Canada is forging with China, which follows from his decision to “strategically, pragmatically and decisively” change relations with Beijing.
Mr. Carney, speaking to reporters in Beijing, said relations with China have recently been more predictable than those with the U.S. and the “results coming from that” are visible.
The Prime Minister made several references during his visit to the upset in global trading rules – a disruption that has increased under Mr. Trump. “The world has changed much since that last visit. I believe the progress that we have made in the partnership sets us up well for the new world order,” Mr. Carney said Thursday during earlier meetings with Premier Li Qiang.
There are caveats to Canada’s tariff concession, which lowers levies on Chinese EVs from 100 per cent to 6.1 per cent starting March 1: It applies to the first 49,000 vehicles imported each year. Mr. Carney later told reporters he expects the quota will rise about 6 per cent annually – reaching 70,000 in half a decade.
In return, China, by March 1, will cut tariffs on canola seed to approximately 15 per cent from current combined tariff levels of 84 per cent, the Prime Minister said.
And, according to Mr. Carney, Beijing has also committed to removing tariffs on Canadian canola meal, lobsters, crabs and peas by that date “until at least the end of this year.” He did not elaborate on this or whether this tariff relief would be extended beyond 2026.
Foreign Affairs Minister Anita Anand says Prime Minister Mark Carney's trip to Beijing is about boosting trade and refreshing Canada's relationship with China.
The Canadian Press
Saskatchewan Premier Scott Moe, who joined Mr. Carney on the trip and has been advocating for a break on canola tariffs, praised the deal in a statement as “very good news for Canada and Saskatchewan.”
The Prime Minister also said Mr. Xi has committed to removing visa requirements for Canadians travelling to China.
Canada imposed the tariff on Chinese electric vehicles in tandem with the U.S. in 2024 under the Biden administration.
The rationale for Canada’s levies on these imports was that China is subsidizing and overproducing EVs, swamping global markets and undermining other countries’ ability to compete.
Mr. Carney did not address those concerns Friday.
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Conservative Leader Pierre Poilievre, who has previously described Chinese EVs as “roving surveillance systems” that should not be allowed on Canadian streets, issued a statement criticizing the deal.
“Prime Minister Carney must explain how he has gone from saying China was Canada’s ‘biggest security threat’ before the election to announcing a ‘strategic partnership’ with Beijing after the election,” he said.
Ontario Premier Doug Ford also criticized the EV tariff cut Friday, warning this could hurt Canada’s auto sector, which is largely concentrated in his province. “Make no mistake: China now has a foothold in the Canadian market and will use it to their full advantage at the expense of Canadian workers.”
Asked how he will explain to the United States why Canada is giving China freer access to its automobile market, Mr. Carney played down the amount of low-tariff access granted.
He said the quota for Chinese EVs reflects imports from the past full year before the tariff was applied and it is “less than 3 per cent of the size of the Canadian auto market.” Canadians buy about 1.8 million vehicles each year, Mr. Carney said.
He also defended allowing in more foreign vehicles at a time when the Canadian auto assembly industry is under pressure, saying the Chinese supply will offer lower-priced EVs for Canadian consumers.
Carney says he and Xi talked about Greenland's sovereignty and the U.S. president's threats to the territory during their meeting in Beijing.
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Part of the Chinese EV quota will be reserved for cars with an import price of $35,000 or less, Mr. Carney said. The proportion of the quota dedicated to this category will rise 50 per cent by 2030, he said, kickstarting the availability of more affordable electric vehicles in Canada.
Mr. Carney said he expects this EV deal will spur Chinese auto industry investment in Canada. He offered no details on what would drive China’s EV makers to relocate production to Canada.
He said the Canadian government has set a goal of increasing exports to China by 50 per cent by 2030.
The Prime Minister defended his engagement with China despite Western criticism of its human-rights record.
“We take the world as it is – not as we wish it to be,” Mr. Carney said.
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Mr. Carney’s four-day official visit to China, which began on Wednesday, is the first by a Canadian prime minister since 2017. Relations between Western countries and China deteriorated as countries, including Canada, blocked Chinese companies from investing in an increasing array of sectors from telecommunications to critical minerals to security-related industries.
But the Carney government is shifting tack after setting a 10-year goal for Canada to double non-U.S. trade, which would generate $300-billion more in annual exports.
With reports from Reuters, Alexandra Li in Beijing and Laura Stone in Toronto