The recent agreement between Canada and China marks a significant milestone in trade relations, particularly impacting the electric vehicle (EV) and agricultural sectors. On Friday, Prime Minister Mark Carney announced this landmark deal, which he believes reflects a more pragmatic and respectful collaboration between the two nations.
Overview of the Canada-China EV and Canola Deal
The agreement entails the reduction of tariffs on several products. Key highlights include:
- China will now allow the import of 49,000 Canadian electric vehicles at a reduced tariff of 6.1%. This is a significant change from the 100% tariff imposed by Canada on Chinese EVs, effective summer 2024.
- In return, Canada expects China to lower tariffs on Canadian canola to 15% by March and eliminate tariffs on related products like canola meal, lobsters, crabs, and peas by 2026.
Background to the Agreement
The agreement follows a decade of tumultuous relations between Canada and China. Tensions escalated notably during the Meng Wanzhou extradition trial, leading to tariffs on Canadian canola and other agricultural products.
In March 2025, China imposed a 100% tariff on Canadian canola oil, meal, and peas, alongside 25% tariffs on pork and seafood. These tariffs were partly a response to Canada’s earlier decision to apply a 100% tariff on Chinese EVs, aimed at preventing an influx of heavily subsidized vehicles into North America.
Key Reactions
Reactions to the deal have been mixed among Canadian leaders:
- Saskatchewan Premier Scott Moe welcomed the agreement as a positive step, emphasizing its benefits for the agricultural sector.
- Manitoba Premier Wab Kinew echoed this sentiment, stating that relief from canola tariffs was overdue.
- Conversely, Ontario Premier Doug Ford criticized the deal, arguing it favors Chinese automakers and jeopardizes the Canadian auto industry.
Industry Perspectives
Different sectors have varied reactions to the deal:
- The Canadian Canola Growers Association hailed the agreement, viewing it as a stabilization factor for the industry.
- However, the automotive sector expressed concerns, warning that engaging with China could complicate Canada’s relationship with the U.S. and affect the Canada-U.S.-Mexico Agreement (CUSMA).
- Trade representatives emphasized the need for safeguards, suggesting a review mechanism to assess the impacts of the EV imports.
Future Implications
As Canada and China move forward with this partnership, the implications for trade practices in North America remain critical. With potential repercussions on the U.S.-Canada trade relationship, industry stakeholders are closely monitoring developments. The focus will remain on how this deal influences domestic markets and international relations in the coming months.
