The recent agreement between Prime Minister Mark Carney and the Chinese government is an essential step in addressing trade tensions between Canada and China. This deal comes after elevated tariffs were imposed on Chinese exports and retaliatory measures taken by China against Canadian goods.
Background of the Canada-China Relations
The tensions escalated significantly after the arrest of Huawei’s CFO in 2018. Following this, relations between Canada and China deteriorated sharply. The situation was exacerbated in August 2024 when Canada imposed a 100% duty on Chinese vehicle imports. In response, China retaliated with tariffs of 75% on canola seed imports and 100% on Canadian canola oil.
Economic Impact and Trade Considerations
The bilateral trade relationship is vital for both countries. Currently, Canada imports significantly more from China than it exports. Nevertheless, China accounts for around $30 billion in goods imported from Canada. This economic interdependence must be managed carefully.
- In the second quarter of 2025, China was responsible for 8.3% of Quebec’s total trade.
- The United States remains the top trading partner for Quebec, although its share of international trade has declined to 44.7%.
- Historically, China has become a global manufacturing hub, attracting North American businesses to establish supply chains.
Future Directions and Market Diversification
The Canadian government faces pressure to diversify its trade relationships. With the U.S. relationship proving unpredictable, Canada must explore partnerships that offer mutual benefits. The recent agreement, which involves reducing tariffs on canola and seafood imports and allowing limited Chinese electric vehicle imports, represents a promising start.
Quebec’s pork producers are particularly interested in further tariff reductions, especially as the current 25% duty imposed on pork products has severely impacted exports to China. Olymel, a leading pork processor, has seen its exports to China drop from 30% to just 13% due to these tariffs.
The Canadian market must evolve to decrease reliance on the United States. Diversifying trade with China seems to be a necessary strategy moving forward. As global dynamics shift, Canada has an opportunity to reshape its economic landscape significantly.
