Canada Shifts Trade Strategy: A New Deal with China

Sat Jan 17 2026 14:47:47 GMT+0200 (Eastern European Standard Time)

In an unprecedented pivot from its traditional reliance on the US, Canada secures a trade deal with China, easing tariffs on electric vehicles while prompting mixed reactions from domestic leaders and the international community.

Canada's Prime Minister Mark Carney announces a significant trade deal with China, reducing tariffs on Chinese electric vehicles while China reciprocates by lowering tariffs on key Canadian agricultural products. This shift signals a new chapter in Canada's foreign policy, reflecting growing uncertainties in its relationship with the US. Prime Minister Carney emphasizes that Canada is recalibrating its position in the global market, gaining independence in trade negotiations despite critiques and concerns from local stakeholders.

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.

This 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 on Friday 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, as daylight broke on Friday, reaction to the deal was swift. Some, like Saskatchewan Premier Scott Moe, hailed it as very good news. Farmers in Moe's province have been hard hit by China's retaliatory tariffs on Canadian canola oil, and the deal, he said, would bring much needed relief.

But Ontario Premier Doug Ford, whose province is home to Canada's auto sector, was sharply critical of the deal. He said removing EV tariffs on China would hurt our economy and lead to job losses.

With the lower EV tariffs, approximately 10% of Canada's electric vehicle sales are now expected to go to Chinese automakers, which may put pressure on US-based EV makers like Tesla.

Carney has signalled to the Trump administration that it is warming up to China, said Vivek Astvansh, a business professor at McGill University in Montreal.

The deal with China drops Canada's levies on Chinese EVs from 100% to 6.1% for the first 49,000 vehicles imported each year. In exchange, China will cut tariffs on Canadian canola seed to around 15% by March 1, down from the current rate of 84%. Carney said Beijing had also committed to removing tariffs on Canadian canola meal, lobsters, crabs and peas until at least the end of the year.

Beijing did not corroborate the details but stated that the two reached a preliminary joint agreement on addressing bilateral economic and trade issues.

For Carney, Friday's deal may just be the first step in a recalibration of Canada's trade relations.