Canada and China Forge New Strategic Partnership with Landmark Trade Deal on EVs and Canola

Historic Agreement Reached in Beijing

Canadian Prime Minister Mark Carney and Chinese leader Xi Jinping announced a new strategic partnership on Friday, January 16, 2026, following high-level meetings in Beijing. The landmark agreement includes a tariff-quota deal on electric vehicles (EVs) and canola, signaling a significant shift in the trade relationship between the two nations.

Prime Minister Carney described the pact as a 'preliminary but landmark' agreement designed to remove trade barriers and reduce tariffs, forming part of a broader strategic partnership. He emphasized that the partnership 'reflects the world as it is today, with an engagement that is realistic, respectful and interest-based.'

Key Details of the Tariff-Quota Deal

The newly forged agreement addresses long-standing trade disputes and introduces specific tariff adjustments:

• Electric Vehicles (EVs): Canada has agreed to allow up to 49,000 Chinese electric vehicles into the Canadian market annually at a reduced tariff rate of 6.1 percent. This marks a substantial decrease from the previous 100 percent tariff that Canada had imposed on Chinese EVs. By 2030, half of these imported vehicles are projected to cost less than $35,000, aiming to make EVs more affordable for Canadians.
• Canola and Agricultural Products: In return, China is expected to lower its duties on Canadian canola seeds to 15 percent from 84 percent by March 1. Additionally, Chinese 'anti-discrimination' tariffs on Canadian canola meal, lobsters, crabs, and peas will be removed from March until at least the end of 2026.

This deal represents a de-escalation of tensions between Canada and China, following a period of strained relations and retaliatory tariffs.

Broader Strategic Partnership and Context

Beyond the immediate trade concessions, the strategic partnership aims to foster increased tourism and cultural ties. Prime Minister Carney also stated that President Xi has committed to visa-free travel for Canadians to China.

The agreement comes after Canada had previously aligned with the United States in imposing tariffs on Chinese EVs. Prime Minister Carney noted that China has become a more predictable partner compared to the U.S., stating, 'Our relationship has progressed in recent months with China. It is more predictable and you see results coming from that.' This move is seen as part of Canada's effort to diversify its trade relationships amidst global economic shifts and tariffs from other major trading partners.

Reactions and Future Outlook

The deal has elicited mixed reactions within Canada. While Saskatchewan Premier Scott Moe, who accompanied Carney on the trip, expressed enthusiasm for the benefits to canola exports, Ontario Premier Doug Ford and some auto industry groups have voiced concerns, viewing the plan as a potential threat to Canada's domestic auto industry. Conservative Leader Pierre Poilievre also raised questions regarding the permanence and completeness of the tariff eliminations.

This agreement follows an initial meeting between Carney and Xi in October on the sidelines of the Asia Pacific Economic Co-operation summit in South Korea, which Xi described as opening 'a new chapter in turning China-Canada relations toward improvement.'