07:40 17-01-2026

Canada and China agree on trade deal for EVs and agricultural products

Canada and China have announced a preliminary trade agreement that aims to ease tariff restrictions and restore economic dialogue after several years of strained relations. The deal focuses on electric vehicles and agricultural products.

Key Aspect

Canadian Prime Minister Mark Carney stated that Ottawa is prepared to allow imports of up to 49,000 Chinese electric vehicles under a most-favored-nation tariff rate of 6.1%. This marks a sharp reversal from the 100% tariff imposed in 2024 by the previous government. According to Carney, the new agreement returns trade conditions to a level that existed before the escalation of trade conflicts, but now within a broader and more structured arrangement.

Technical and Market Details

The reduction in electric vehicle tariffs comes alongside expectations that China will ease its tariffs on Canadian rapeseed. Beijing is expected to lower the combined rate on canola seed imports to around 15% by early March, providing significant relief for Canadian farmers. Previously, the tariff burden reached 84%, leading to a decline in exports to China of over 10% by the end of 2025. The agreements also plan to eliminate discriminatory tariffs on Canadian seafood and legumes.

Market Significance and Implications

The deal reflects Canada's pragmatic shift amid complicated trade relations with the United States and increased global competition in the electric vehicle market. Ottawa hopes the agreement will attract substantial Chinese investment into Canada's automotive industry, accelerate the development of local EV supply chains, and support the transition to a carbon-neutral economy. For China, the agreement with a key U.S. ally signals that a strategy of hard economic decoupling is not universally applicable.