Carney reaches ‘landmark’ tariff quota deal with China on EVs, canola

Prime Minister Mark Carney touted a renewed relationship with China and “enormous progress” on trade irritants as he announced a new deal with Beijing on electric vehicles and canola at the end of a high-profile trip to China on Friday.

But the agreement has received mixed reviews at home. Ontario and the auto sector warned of the dangers of giving China new access to Canada’s auto market, while Prairie premiers and farm groups welcomed the drop in tariffs on some agricultural products.

The deal, made public shortly after Carney met with President Xi Jinping in Beijing, marks a de-escalation in tensions with a country the Liberal government branded as a disruptive power just three years ago.

Carney distanced himself from that description on Friday, noting he was not part of the government that used the term in Canada’s 2022 Indo-Pacific strategy.

“Our relationship has progressed in recent months with China,” he said, pointing to the numerous discussions he has had with both Xi and Premier Li Qiang over the past 10 months. “It is more predictable and you see results coming from that.”

After agreements were announced on energy, forestry products and pet food on the first day of Carney’s visit, Friday brought news of a deal to end the trade dispute that began in 2024 — when Canada accused China of unfairly subsidizing and dumping electric vehicles in the North American market and imposed 100 per cent tariffs.

China responded in March 2025 with a 100 per cent tariff on Canadian canola oil, peas and other products, along with 25 per cent tariffs on pork and seafood products, and later that year added canola seed to its trade actions.

Following months of negotiations, Canada has agreed to allow up to 49,000 Chinese electric vehicles into Canada at a “most favoured nation tariff rate” of 6.1 per cent.

By 2030, half of those imported vehicles must cost less than $35,000 — a measure Carney said will ensure EVs are more affordable for Canadians.

Carney said that in return, Ottawa expects Beijing to drop canola seed duties to 15 per cent from 84 per cent by March 1.

Canadian canola meal, lobsters, crabs and peas will no longer be subject to Chinese “anti-discrimination” tariffs from March to at least the end of the year. There was no mention of canola oil, which is subject to a 100 per cent tariff, and no change was made to the 25 per cent tariff on Canadian pork.

“This is enormous progress,” Carney said, calling it a “new partnership, a new era.”

Carney said the deal is part of a broader strategic partnership with China that includes boosting tourism and cultural ties. Carney said Xi has committed to visa-free travel for Canadians to China.

“It’s a partnership that reflects the world as it is today, with an engagement that is realistic, respectful and interest-based,” he said.

But Ontario Premier Doug Ford, who had urged Carney not to drop the EV tariffs on China, slammed the deal, saying China now has “a foothold in the Canadian market” that it will use at the expense of Canadian workers.

He said the deal risks closing the door to the U.S. market for Canadian automakers and urged the federal government to support Ontario’s auto sector.

Conservative Leader Pierre Poilievre asked why there’s no guarantee that China’s retaliatory tariffs will be “permanently, immediately or completely eliminated.”

Saskatchewan Premier Scott Moe, who was in Beijing with Carney, called the deal “very good news for Canada and Saskatchewan.”

Canada’s move to renew its relationship with China comes as it is facing substantial stress in its relationship with the United States. President Donald Trump has imposed massive tariffs on most countries, including Canada.

While some U.S. government officials said Canada was playing with fire by allowing in more Chinese vehicles, Trump himself seemed unconcerned.

“That’s what he should be doing. It’s a good thing for him to sign a trade deal,” he said when asked about it by reporters on Friday afternoon.

Alberta Premier Danielle Smith said in a media statement that she welcomes the reduction of Chinese tariffs on canola and peas and hopes to see a similar cut to Chinese tariffs on Canadian pork and other products “in the near future.”

“I trust that Canadian security authorities will take any measures necessary to ensure all vehicles and other products sold into Canada pose no threat to our nation’s privacy laws or national security interests,” she said. “We also welcome the recognition of the important role oil and gas will play in expanding Canada’s bilateral trade relationship with China.”

Interim NDP leader Don Davies said the Canada-China agreement is “a step forward.”

“NDP will continue to press for Chinese EVs to be built in Canada — access to our auto market should create Canadian jobs,” he said on social media.

Carney said the electric vehicles agreement is heavily tilted toward “a new segment of the Canadian market” — lower-cost EVs with a price tag of $35,000 or less. Most EVs in Canada cost substantially more than that.

He also said this is just the “beginning of discussions and expectation of Chinese investment in Canada and partnership in Canada to produce vehicles over time … to partner with Canadian firms.”

Greg Cherewyk, president of Pulse Canada, said tariffs effectively stopped all shipments to China and Canadian yellow peas worth about $700 million a year were being displaced by Russian products.

“It was really important that this didn’t last as long as we had feared it would last, into the years,” he said, adding that the timing is ideal for farmers to make seeding decisions.

Canada is the top global exporter of canola and China is the industry’s second-largest market after the U.S.

Ongoing concerns about China posing a threat to national security hovered over the day’s announcements.

Just a year ago, during the spring election, Carney described China as the biggest security threat facing Canada.

Poilievre demanded to know what changed.

“Prime Minister Carney must explain how he has gone from saying China was Canada’s ‘biggest security threat’ before the election to announcing a ‘strategic partnership’ with Beijing after the election,” Poilievre said in his statement.

Carney’s answer to a reporter’s question on the subject Friday was less than clear-cut.

“The security landscape continues to change, and in a world that’s more dangerous and divided, we face many threats,” he said. “You manage the threats through engagement.”

The deals come as the Liberal government seeks to double non-U.S. exports by 2030 — and boost exports to China by 50 per cent by that date.

A newsletter published Friday by the Chinese Embassy in Ottawa said that Xi told Carney he wants the two countries to “be partners that respect each other.”

“While China and Canada have different national circumstances, they should respect each other’s sovereignty and territorial integrity, as well as choice of political system and development path, and adopt the right approach in their interactions,” the newsletter said.

Carney said he raised human rights in the meeting with Xi and that Canada’s approach is one of “value-based realism.”

“We fundamentally stand up for human rights, for democracy, territorial integrity, rights to self-determination,” he said. “We take the world as it is, not as we wish it to be.”

Carney and Xi met in the fall on the sidelines of the Asia-Pacific Economic Cooperation forum in South Korea. It marked the first official meeting between the leaders of Canada and China since 2017.

Carney also confirmed he’ll return to China in November for the APEC summit in the city of Shenzhen.

This report by The Canadian Press was first published Jan. 16, 2026.

— With files from Sarah Ritchie in Ottawa and Kelly Geraldine Malone in Washington