Brian Zinchuk is editor and owner of Pipeline Online
Editor’s note: This is the verbatim backgrounder posted on the Government of Canada website regarding the Jan. 16 trade deal between Canada and China.
Backgrounder – Preliminary Agreement-In-Principle to Address Economic and Trade Issues between Canada and the People’s Republic of China
Addressing Bilateral Economic and Trade Concerns
The People’s Republic of China is the world’s second largest economy. It is Canada’s second largest single-country trading partner, with bilateral merchandise and services trade totalling $130.9B in 2024. As we face this hinge moment in history and fundamental transformations in the world’s trade networks, Canada must have a serious, focused, and pragmatic relationship with China. Through this agreement-in-principle, we are settling long-standing trade issues and establishing a track for major new investments benefitting Canadian workers and businesses.
As part of this agreement, there will an opportunity to review its progress and implementation in three years to assess and confirm if all expected Canadian benefits have materialised as anticipated. Canada and China have also agreed to continue work in coming months on additional trade irritants of economic importance.
Electric Vehicles
Canada intends to provide an initial country-specific quota of 49,000 electric vehicles (EVs) per year at a most-favoured-nation tariff rate of 6.1%. We expect that this will catalyse considerable new Chinese joint-venture investment in Canada with trusted partners to protect and create new auto manufacturing jobs for Canadian workers, and ensure a robust build-out of Canada’s EV supply chain. The proportion of the country-specific quota reserved for affordable EVs with an import price of $35,000 CAD or less will reach 50% by 2030, kickstarting the availability of more affordable electric vehicles in Canada.
This will provide certainty to Canada’s domestic auto-manufacturing industry by establishing managed market entry of affordable Chinese electric vehicles, within a predictable import frame. Canada will also work with Chinese auto manufacturers on timely vehicle certification to ensure they meet Canadian motor vehicle safety standards.
This amount is a return to volumes close to the year prior to recent trade frictions on these imports (2023-2024). This amount represents less than 3% of the market for new vehicles sold in Canada.
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Canola Seeds
By March 1st, 2026, Canada expects that China will lower tariffs on Canadian canola seed to a combined rate of approximately 15%. This change represents a significant drop from current combined tariff levels of 84%. This will significantly improve market access for approximately $4 billion of Canadian canola seed exports to China annually.
Canola Meal, Lobsters, Peas, Crabs and Other Products
Canada expects that Canadian canola meal, lobsters, peas and crabs will not be subjected to relevant anti-discrimination tariffs from March 1, 2026, to the end of this year. This will significantly improve market access for $2.6 billion of Canadian agricultural goods, benefitting Canadian farmers across the country and seafood harvesters on both the Atlantic and Pacific coasts.
Canada expects China to accelerate the resumption of exports of Canadian beef, pet food, animal genetics, and other products to China.
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Steel and Aluminum
Canada will extend to the end of 2026 previous remission measures for certain Chinese steel and aluminium products that are in short supply in Canada, covering 66 lines of product-specific remissions (11 full remissions and 55 partial remissions), and 59 tariff lines of company-specific remissions. Canada will also expand remissions coverage to 7 steel, 2 aluminum, and 4 steel derivative products. This expansion will enter into force by March 1, 2026, and be retroactive to January 1, 2026.
This measure covers steel, aluminum, and derivative products that are in low or have no supply in Canada, meaning they are not made by Canadian producers in sufficient volumes to serve the Canadian economy.
Trade Diversification
To build on this progress, Canada has set an ambitious new goal to increase our exports to China by 50% by 2030.
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