Canada and China reach trade arrangement: canola tariffs to fall as limited Chinese EV imports begin
China will cut several tariffs on Canadian canola and seafood as Canada permits a gradual quota of Chinese electric vehicles at preferential tariffs.
Copy link
By Torontoer Staff
Canada and China announced a landmark trade arrangement after Prime Minister Mark Carney met President Xi Jinping in Beijing, easing several recent Chinese trade measures against Canadian agricultural exports while allowing a limited, phased entry of Chinese electric vehicles into the Canadian market.
The agreement aims to boost Canadian exports to China, already the country’s second largest trading partner, and to attract Chinese investment into Canada’s auto sector. Officials set specific tariff and quota changes that take effect in the coming months.
Key tariff and export changes
Under the arrangement, China will significantly reduce tariffs it imposed last year on several Canadian products, while Canada agreed to a limited quota of Chinese electric vehicles at a reduced tariff rate.
- Canola seed tariffs will drop from 75.8 per cent to 15 per cent, effective in March.
- Canola meal and peas will have 100 per cent tariffs lifted at least until the end of the year.
- A 25 per cent border levy on Canadian lobster and crab will be removed starting March 1.
- Canola oil remains subject to a 100 per cent tariff, and no change was announced for that product.
Electric vehicle quota and objectives
Canada agreed to allow up to 49,000 Chinese-made electric vehicles to enter the country at a preferential tariff rate of 6.1 per cent. The quota will grow by roughly six per cent annually, reaching about 70,000 units within five years. Half of the 2030 quota is reserved for vehicles priced under $35,000.
The quota replaces a 100 per cent border levy on Chinese EVs that former prime minister Justin Trudeau imposed in 2024. The Canadian government framed the change as a measured step to increase domestic demand, integrate supply chains, and attract Chinese investment in local EV production, with the stated goal of encouraging factory construction in Canada.
It is expected that within three years, this agreement will drive considerable Chinese investment into Canada’s auto-sector, create good careers in Canada, and accelerate our progress towards a net-zero future.
Mark Carney
For Canada to build its own competitive EV sector, we will need to learn from innovative partners, access their supply chains, and increase local demand.
Mark Carney
Diplomatic context and reactions
The agreement marks a significant shift in Ottawa’s approach to Beijing after years of strained relations. It follows a period in which Canada described China as a growing security concern, and after punitive Chinese tariffs and other measures were imposed on Canadian goods.
The move to allow Chinese EVs at reduced tariffs is likely to draw scrutiny from the United States. Washington has imposed steep tariffs on Chinese EVs to shield its domestic industry from what it views as heavy state subsidies. Canadian officials told reporters the initial quota represents under three per cent of annual vehicle purchases.
History of tensions and remaining risks
The diplomatic freeze that began after Canada detained Huawei executive Meng Wanzhou in 2018 and the subsequent detention of Canadians Michael Spavor and Michael Kovrig is central to recent history between the two countries. Ottawa and Beijing have cited those events when describing the deterioration and gradual restoration of bilateral ties.
Canadian officials acknowledged the risks of engaging with a trading partner that has used coercive trade measures in the past. The timing of last August’s 75.8 per cent canola seed tariff, issued shortly before harvest, was cited by Canadian industry as an example of targeted economic pressure.
Other agreements and next steps
Alongside tariff and quota changes, Canada and China signed several non-binding memoranda of understanding covering collaboration in oil, gas and nuclear energy, forestry, culture, tourism, food inspection, public safety, and pet food trade. Canadian ministers and business leaders also met Chinese executives in energy, battery storage, e-commerce, and wind sectors to explore investment opportunities.
Carney said China also agreed in principle to visa-free travel for Canadians, but he did not provide a timeline. Officials will monitor implementation of the tariff reductions and the EV quota, and pursue follow-up negotiations on outstanding trade issues, including canola oil duties.
The government set an export target tied to the arrangement, aiming to increase Canadian exports to China by 50 per cent by 2030. Achieving that goal will depend on industry responses, investment flows, and the stability of the bilateral relationship.
The Carney-Xi meeting, the highest-level bilateral encounter since 2017, signals a pragmatic pivot in Ottawa’s China policy. Implementation timelines and market impacts will determine whether the agreement delivers the anticipated gains for Canadian farmers, fishers and manufacturers.
CanadaChinatradecanolaelectric vehiclestariffsMark CarneyXi Jinping
