Canada and China Forge New Trade Deal Amidst US Trade Uncertainty

Sat Jan 17 2026 17:25:47 GMT+0200 (Eastern European Standard Time)

In a significant policy shift, Canada strikes a deal with China to ease tariffs on electric vehicles, reflecting a desire for economic autonomy amidst US tensions.

Prime Minister Mark Carney's government has reached a landmark agreement with China that lowers tariffs on Chinese electric vehicles while prompting China to cut tariffs on key Canadian agricultural exports. This move signals a strategic pivot away from dependence on the US amid rising trade tensions and represents a new direction in Canada's foreign policy. Reactions domestically and internationally vary, highlighting the complexities of balancing trade relationships.

Prime Minister Mark Carney's new approach to Canada's foreign policy can perhaps be distilled in one line: We take the world as it is, not as we wish it to be.

That was his response when asked about the deal struck with China on Friday, despite concerns over its human rights record and nearly a year after he called China the biggest security threat facing Canada.

The deal will see Canada ease tariffs on Chinese electric vehicles that it imposed in tandem with the US in 2024. In exchange, China will lower retaliatory tariffs on key Canadian agricultural products.

Experts told the BBC the move represents a significant shift in Canada's policy on China, one that is shaped by ongoing uncertainty with the US, its largest trade partner.

The prime minister is saying, essentially, that Canada has agency too, and that it's not going to just sit and wait for the United States, said Eric Miller, a Washington DC-based trade adviser and president of the Rideau Potomac Strategy Group.

Carney told reporters that the world has changed in recent years, and the progress made with China sets Canada up well for the new world order. Canada's relationship with China, he added, had become more predictable than its relationship with the US under the Trump administration.

In Canada, reactions to the deal were swift. Some, like Saskatchewan Premier Scott Moe, hailed it as very good news, saying it would bring much-needed relief to farmers affected by China's tariffs. However, Ontario Premier Doug Ford criticized the deal, warning it could hurt the Canadian economy by allowing too many inexpensive Chinese electric vehicles into the market.

The deal, which drops Canada's levies on Chinese EVs from 100% to 6.1% for the first 49,000 vehicles each year, also includes commitments from China to reduce tariffs on various Canadian agricultural exports significantly. In addition, China will remove visa requirements for Canadian visitors.

While this deal reflects a major recalibration of Canada's trade relationships, experts caution that it may lead to challenges for local manufacturers if not accompanied by further government protections for the Canadian auto industry.

In summary, this agreement not only marks a pivotal moment in Canada-China relations but also underscores the shifting dynamics of international trade, especially amid the uncertainties posed by dealings with the US.