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China and Canada agree to cut tariffs after Beijing talks
Chinese leader Xi Jinping and Canadian Prime Minister Mark Carney announced a sharp reduction in trade barriers on Friday, marking a potential thaw in relations after years of escalating tariffs. The agreement, reached during Carney's three-day visit to Beijing, includes a dramatic cut in China's levies on Canadian canola oil and a cap on Chinese electric vehicle imports into Canada.
Key terms of the trade deal
China will lower its tariff on Canadian canola oil from 85% to 15%, effective 1 March, according to Carney. In return, Canada will tax Chinese electric vehicles at its most-favoured-nation rate of 6.1%, down from the previous 100%. However, Ottawa will limit imports to 49,000 vehicles annually to address concerns from domestic automakers about competition from affordable Chinese EVs.
Additional concessions include reduced tariffs on Canadian lobsters, crabs, and peas, providing relief to agricultural exporters hit by Beijing's retaliatory measures in 2024.
A reset after years of tension
Xi described the agreement as a "turnaround" in bilateral relations, while Carney framed it as a pragmatic response to global trade uncertainties, particularly those stemming from U.S. tariff policies under former President Donald Trump. "We take the world as it is-not as we wish it to be," Carney told reporters, acknowledging differences with Beijing on human rights and other issues.
The deal follows a period of heightened friction, including Canada's 2024 decision to impose 100% tariffs on Chinese EVs, mirroring U.S. actions. China retaliated with tariffs on over $2 billion worth of Canadian farm and food products, leading to a 10% decline in Chinese imports of Canadian goods in 2025.
Geopolitical implications
Observers view Carney's visit as a signal to other nations grappling with U.S. trade policies. Xi has sought to position China as a stable partner amid global economic shifts, hosting leaders from South Korea, Ireland, and soon the U.K. and Germany in recent weeks. Carney emphasized the strategic importance of the relationship, stating that Canada's positioning "will shape our future for decades to come."
During the visit, the two countries signed agreements on energy and trade cooperation, and Carney met with executives from Chinese battery manufacturers and energy firms. However, former Canadian diplomat Colin Robertson described the reset as "modest in ambition" but "realistic" about achievable outcomes.
Human rights and diplomatic red lines
Carney stressed that Canada's engagement with China would remain "narrower, more specific" on issues where values diverge. He cited discussions on Taiwan, Hong Kong's pro-democracy figure Jimmy Lai, and human rights as examples of Ottawa's "red lines."
"We're very clear about where we cooperate, where we differ," Carney said. "We don't grab a megaphone and have the conversations that way."
Mark Carney, Canadian Prime Minister
Michael Kovrig, a Canadian detained in China from 2018 to 2021, urged Carney to use the visit to advocate for Canadians imprisoned in China, estimated at around 100. Kovrig warned that Chinese negotiators are "extremely adroit, calculating, and always looking for leverage."
Historical context
The last Canadian prime minister to visit China was Justin Trudeau in 2017, before relations deteriorated following Canada's arrest of Huawei executive Meng Wanzhou at the U.S.'s request. China's subsequent detention of Kovrig and fellow Canadian Michael Spavor was widely seen as retaliatory. All three were released in 2021.
Xi, addressing the delegations in Beijing's Great Hall of the People, framed the renewed ties as beneficial for "world peace, stability, development, and prosperity."
