Carney’s China pivot: balancing export gains with political risk
Ottawa has struck a deal with Beijing on electric-vehicle and agricultural tariffs to boost exports. The government must use that leverage without increasing Canada’s vulnerability to coercion.
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By Torontoer Staff
Prime Minister Mark Carney has reached a trade understanding with China that lowers barriers for Chinese electric vehicles in Canada and secures a partial rollback of Beijing’s retaliatory tariffs on canola, pork and seafood. The move is intended to help Ottawa increase exports to China by 50 per cent by 2030 as it seeks to rebalance trade away from the United States.
The agreement allows Chinese EVs into Canada under a phased quota, with tariff rates on that quota falling to the most-favoured-nation rate of 6.1 per cent. In exchange, China will ease measures it imposed on Canadian agricultural products in 2024.
What the deal includes
Under the arrangement, Canada will abandon a blanket 100 per cent tariff on Chinese electric vehicles and replace it with a quota-based system. Tariff rates for vehicles imported under that quota will drop to the standard most-favoured-nation level of 6.1 per cent, considerably lower than some European tariffs on Chinese EVs. Ottawa is also holding out the possibility of Chinese auto investment in Canada, following the model used for other Asian automakers.
- EV quota with tariffs at 6.1 per cent for the quota amount
- Partial rollback of Chinese tariffs on canola, pork and seafood
- Target to raise Canadian exports to China by 50 per cent by 2030
- Longer-term aim to attract Chinese investment in Canadian auto manufacturing
A strategy to counter U.S. pressure, with limits
Ottawa’s move follows a period of heightened trade tension with the United States. Expanding access to China can reduce Canada’s dependence on the U.S. market and blunt economic pressure from Washington. But the arrangement raises the risk of increasing Canadian exposure to Beijing’s leverage, especially if single commodities come to rely disproportionately on Chinese demand.
Canada’s leverage is even greater than the size of its economy alone might portend. Other countries will take notice of this EV agreement, which could become a test case for lowering tariffs on Chinese industry.
Jeff Mahon, StrategyCorp
Energy and crude markets
Canadian crude exports to China have risen sharply since the Trans Mountain Expansion began operations in May 2024. Ottawa sent about $2.4 billion in oil to China in 2024, and imports from January through October 2025 were nearly triple the same period in 2024. That has made China the second-largest export market for Canadian crude by dollar value.
At the same time, developments in the U.S. energy market could shift flows. If U.S. policy limits Venezuelan crude shipments to China, demand for alternative heavy oils could rise, creating opportunities for Canadian supply. Ottawa must plan infrastructure and export capacity carefully to avoid repeating past conditions when heavy oil gluts depressed prices for Canadian bitumen.
Agriculture: diversify before dependency deepens
Canada learned the cost of overreliance on a single buyer in 2024, when China accounted for 78 per cent of canola seed exports and used that market share to exert pressure. Any strategy to broaden ties with China should be paired with efforts to develop alternative markets for key commodities.
Dalhousie University professor Sylvain Charlebois points to India as a major long-term prize, given rising protein demand and a shortfall in edible-oil production. Barriers there include tariffs and political sensitivities, so quicker gains are more likely in Southeast Asia, including Vietnam.
In the shorter term, Vietnam and Southeast Asia will be more readily available opportunities. None of that will happen overnight; Canada cannot wait until the next crisis to start laying that groundwork.
Sylvain Charlebois, Dalhousie University
Longer-term considerations
Beijing’s long-term demographic trends also factor into trade strategy. China’s population has peaked and is forecast to decline for decades, reducing the country’s pace of consumption growth over time. That reality could shorten Beijing’s window for patient economic statecraft, which in turn changes how Ottawa should weigh both opportunity and risk.
The agreement with China should be the start of a broader diversification strategy, not its endpoint. That means expanding market access across Asia, building export infrastructure, and ensuring critical sectors do not become single-market dependent.
For now, the deal gives Canada valuable cards to play. Ottawa must use them to secure immediate relief for affected producers and to build longer-term resilience, so trade with China offsets U.S. pressure without creating new vulnerabilities to Beijing’s economic leverage.
Canada-China relationstradeMark Carneyelectric vehiclescanola
