Canada and China agree tariff swap on EVs, canola and seafood
Ottawa will cut EV tariffs for a limited number of Chinese cars while Beijing rolls back tariffs on canola and seafood. The deal raises concerns about U.S. trade retaliation.
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By Torontoer Staff
Canada and China reached a trade agreement that lowers Canadian tariffs on a limited number of Chinese electric vehicles in exchange for China easing retaliatory tariffs on Canadian canola and seafood, Prime Minister Mark Carney announced after talks in Beijing.
The deal ends six weeks of intensive negotiations and includes visa changes and trade concessions intended to restore market access for Canadian agricultural exporters while opening a modest channel for Chinese-made EVs into Canada.
Key terms of the agreement
Under the agreement, Ottawa will reduce the effective tariff on Chinese electric vehicles to 6.1 per cent for a capped volume. The initial allowance is up to 49,000 EVs, down from the 100 per cent tariff Ottawa imposed on Chinese-made EVs in fall 2024. Carney said this restores a rate that existed before the recent trade frictions with China.
In return, China agreed to cut tariffs on Canadian canola seed to 15 per cent from roughly 84 per cent, effective March 1. Beijing will also remove retaliatory tariffs on canola meal, lobster and crab starting March 1 and through at least the end of the year. Canada secured visa-free travel for Canadians visiting China as part of the package.
- EV tariff, capped volume: 49,000 vehicles at 6.1 per cent
- Canola seed tariff: reduced to 15 per cent by March 1
- Canola meal, lobster and crab: retaliatory tariffs lifted through year-end
- Visa-free travel for Canadians to China
Government rationale and economic aims
Carney framed the deal as a strategic reset to increase bilateral trade and to attract Chinese investment into Canada’s auto sector. He said the agreement should spur investment, create jobs and help Canada meet its net-zero goals by expanding EV availability at lower prices.
It is expected that within three years, this agreement will drive considerable Chinese investment into Canada’s auto-sector, help create good jobs and advance Canada’s net-zero goals,
Prime Minister Mark Carney
Carney also projected that within five years more than half of the imported EVs under the arrangement could be priced under $35,000, and that imports could grow to about 70,000 vehicles by year five. He emphasised the agreement will be reviewed after three years.
Industry concerns and U.S. implications
The agreement drew immediate concern from Canadian automakers and trade observers who warned that easing EV restrictions on Chinese cars could provoke pushback from the United States, complicating trilateral talks on the Canada-U.S.-Mexico trade pact.
Canadian-made autos currently qualify for tariff exemptions under CUSMA if they meet North American content rules. Industry representatives say granting any access to heavily subsidised Chinese manufacturers risks undermining North American integration and could invite retaliation from Washington.
There is no fair competition with the Chinese automotive industry. They massively subsidised this sector and they are now dumping vehicles around the world,
Brian Kingston, Canadian Vehicle Manufacturers' Association
Kingston warned of job losses and cybersecurity risks associated with some Chinese-connected vehicle software, and he pointed to measures taken in other jurisdictions as cautionary examples. Mexican and U.S. policy moves will be important in determining whether Canada faces further trade measures or political pressure in the coming months.
Diplomacy and next steps
Carney said he plans to explain the scope and limits of the arrangement to U.S. officials, noting the initial allowance for Chinese EVs represents less than three per cent of Canada’s annual car market. He characterised the negotiation as part of a renewed strategic partnership with China and set an export growth target to increase Canadian exports to China by 50 per cent by 2030.
Chinese leader Xi Jinping described the November meeting between the two leaders as a turning point and framed the agreement as contributing to a healthy and stable bilateral relationship. Beijing’s official readout was less specific about tariffs, saying only that the two sides agreed to address economic and trade issues through constructive consultation.
A healthy and stable China-Canada relationship is in the interest of our two countries and serves the peace and stability of the world,
Xi Jinping
Officials will monitor how the changes affect Canadian exporters and the automotive sector, and the measures include a formal review after three years. Meanwhile, the response from Washington and the progress of trilateral trade negotiations will shape how durable the arrangement proves to be.
What to watch
- U.S. reaction to Canada easing EV restrictions on Chinese vehicles
- Implementation date and administrative details for the tariff changes
- Any surge of Chinese investment into Canadian auto production plans
- Impact on prices and availability of EVs in Canada over the next five years
The agreement moves quickly on some longstanding trade disputes while leaving open political and economic risks. Ottawa says the package balances access for Canadian exporters with limits on EV imports, but the coming months will test whether that balance holds in the context of North American trade politics.
tradeChinaelectric vehiclescanolaMark Carneytariffs
