Canada signs tariff-quota deal with China on EVs, canola

Prime Minister Mark Carney said Friday the Liberal government has struck a deal with Beijing to allow thousands of Chinese electric vehicles into the domestic market in exchange for the removal of tariffs on canola products.

It is the prime minister’s first deal on trade with another country since taking office last year and marks a reduction in tensions with a country that the Liberal government in recent years has labeled a disruptive force and Carney described as the biggest threat facing the country.

Carney described it as an “early but historic” agreement to remove trade barriers and reduce tariffs, part of a broader strategic partnership with China.

“This is a partnership that reflects today’s world, with a realistic, respectful and interest-based commitment,” Carney said at a news conference in Beijing.

Carney said Ottawa expects Beijing to reduce canola seed tariffs to 15 per cent by March, calling it “huge progress.”

Saskatchewan Premier Scott Moe said a social media post The break on canola tariffs “reflects the importance of foreign trade missions and shows what can be achieved when the federal and provincial governments and our export industries work together to strengthen our trade relationships.”

Canadian canola meal, lobster, crabs and peas will no longer be subject to Chinese “anti-discriminatory” tariffs from March until at least the end of the year. There was no mention of canola oil.

In return, Canada, which has imposed 100 per cent tariffs on Chinese electric vehicles through 2024, will allow 49,000 Chinese EVs into the Canadian market each year at a 6.1 per cent tariff.

Carney said this will make some EVs more affordable for Canadians and it will be a small part of the Canadian domestic market – about three per cent.

Ontario Premier Doug Ford immediately criticized the EV deal, saying that giving China a foothold in the Canadian market would hurt Canadian workers.

“The federal government is inviting a flood of cheap electric vehicles made in China without any real guarantee of similar or immediate investment in the Canadian economy, auto sector or supply chain,” Ford said. said in a post on X.

Ontario’s premier further said the deal threatened to “close the doors to the U.S. market for Canadian automakers” and that Carney needed to balance the deal with support for Ontario’s auto sector.

“That means making the sector more competitive by ending the electric vehicle mandate, harmonizing rules with major trading partners, and eliminating federal tariffs that do nothing but add thousands to the cost of making vehicles and drive away investment,” Ford said.

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Carney said at his media conference that the EV market access granted to China in the deal is not a revolutionary step, but rather “a return to levels seen in 2023, the last full year before the Canadian tariff actions.”

Speaking in French to reporters, Carney said both he and Ford want to create “a new Canadian auto industry” based on high-tech products and affordability and that the deal will help “build a future for our Canadian auto sector.”

“In many ways the most important element is the discussion and hopefully beginning of Chinese investment in Canada and a partnership in Canada to produce vehicles over time,” Carney said.

The deal came just hours after Carney met with Chinese President Xi Jinping, ending a multi-year trade dispute that began when the previous Liberal government imposed EV tariffs to protect Canada’s auto sector.

Exactly a year ago, during the spring elections, Carney had described China as the biggest threat facing the country. Speaking to the media on Friday, his answer was less definite.

When asked by a reporter, Carney responded, “The security landscape is constantly changing, and in a world that is more dangerous and divided, we face many threats.” “You manage threats through engagement.”

Conservative leader Pierre Poilievre said Carney must explain how he went from saying China was a threat to declaring a ‘strategic partnership’ with Beijing.

“Their agreement will allow 50,000 EVs on our roads, putting our safety and auto jobs at risk,” Poilievre said in a statement released Friday.

The deal comes as the Liberal government wants to double non-US exports by 2030 – and also boost exports to China by 50 per cent by that date.

Carney said he raised the issue of human rights in the meeting with Xi and said Canada’s approach is “values-based realism.”

Relations with China ‘more predictable’

“We fundamentally stand for human rights, democracy, territorial integrity, rights to self-determination,” he said. “We take the world as it is, not as we want it to be.”

Answering questions from reporters after meeting Xi, Carney said Canada’s relationship with China has become more predictable than its relationship with the United States.

Carney said this is because Canada enjoys “candid and frequent dialogue” with China that has led to a “more predictable and effective relationship.”

“It’s more predictable in terms of the way our relationship with China has progressed and you’re seeing results coming,” he said.

Relations between Canada and China have been rocky over the past five years, but this signals that a thaw has begun, at least on trade.

Two years ago, Ottawa followed steps by former US President Joe Biden and the European Union to counter China’s booming electric vehicle industry.

Ottawa also imposed a 25 per cent import tax on steel and aluminium.

China responded by imposing a 100 per cent tariff on Canada on canola oil, peas and other products through March 2025, as well as a 25 per cent tariff on pork and seafood products, such as lobster.

The move halted exports of canola oil, halted exports of canola meal and peas, and eliminated pork.

This was followed in August of that year by a tax of nearly 76 per cent on canola seed, increasing pressure from the Prairies on Ottawa to ease rising trade tensions.

China’s anti-dumping investigation into canola seeds was scheduled to end in March.

Canada is the top global exporter of canola and China is the industry’s second-largest market after the US.

Carney and Xi met in the fall on the sidelines of the Asia-Pacific Economic Cooperation Forum in South Korea. It was the first official meeting between the leaders of Canada and China since 2017.

On Friday, Xi called it a “turning point” in bilateral relations.

In the wake of that important meeting, both leaders directed their officials to work on resolving persistent trade troubles.

Saskatchewan’s premier traveled to China this week for some top-level meetings. The province produces more than half of Canada’s total canola production.

Mo also was in China last September with federal officials in hopes of resolving the dispute.

Both Carney and Foreign Affairs Minister Anita Anand, who is on a visit to China, have spoken up on the need for Canada to diversify its trade, while Carney wrote an op-ed in The Economist late last year calling for a new era of “transformative geometry,” in which Ottawa could engage in a variety of multilateral agreements with partners around the world as the U.S. steps back from international leadership and cooperation.

Carney will depart China on Saturday and visit Qatar on Sunday before attending the World Economic Forum’s annual gathering in Switzerland next week. His office said he would meet business leaders and investors in Qatar to promote trade and investment.

Trump agreed to an updated trade deal with Canada and Mexico in his first presidential administration and has called for it this week. Possibility of new agreement “irrelevant” To America’s economic fortunes.

Michigan Gov. Gretchen Whitmer – in her final year in office and considered a potential 2028 Democratic presidential nominee – Called for change in US policy Working with Canada and Mexico is integral for the US to compete economically with China, he said at the Detroit auto show on Thursday.

He said that American manufacturing contracted for nine consecutive months.