Canada & China struck an initial trade deal on Friday, 16 January 2026, that would slash tariffs on electric vehicles and canola. Both nations agreed to tear down previous trade barriers. This is while forging new strategic ties during Prime Minister Mark Carney’s Chinese visit.
Carney is the first Canadian prime minister to visit China in the past nine years, having done so in 2017. After months of diplomatic efforts, Carney seeks to rebuild ties with Canada’s second largest trading partner, after the United States.
Canada intends to initially permit up to 49,000 Chinese electric vehicles (EVs). This was at a tariff of 6.1%, based on most-favoured-nation terms. Carney shared this information after talks with Chinese leaders, including Chinese President Xi Jinping.
That augurs well with the former 100% tariff on Chinese EVs imposed under the former Canadian PM Justin Trudeau. That was nearly two years ago, in 2024. This was the following similar U.S. penalty. 3 years back, in 2023, China exported 41,678 EVs to Canada.
The measure sees a return to levels prior to recent trade frictions. ‘It’s under an agreement that promises much more for Canadians,’ said Carney to reporters. He later added that the quota would gradually increase, reaching about 70,000 vehicles within five years.
With Canada attempting to build its own competitive EV sector, Canada may need to learn from innovative partners. Carney also emphasised the importance of leveraging their supply chains to boost local demand. This was a turn away from Justin Trudeau’s rationale, who believed that tariffs were needed to protect domestic producers against subsidised Chinese manufacturers.
Relaxing EV tariffs diverged from U.S. policy. Some members of U.S. President Donald Trump’s cabinet were critical of the decision. This incident was ahead of an expected review of the U.S.-Canada-Mexico trade deal.
Trump himself expressed support for Carney, saying that’s what he should be doing. It’s indeed a good thing for him to sign a trade deal. So, Trump, elaborating further to reporters at the White House, went on to share that if one benefits from the trade deal with China, one should execute that.
