China and Canada have reached a wide-ranging agreement to lower trade barriers and rebuild ties, signaling a pivot in Canadian foreign policy and a clear break from alignment with Donald Trump's trade agenda. Prime Minister Mark Carney said he expects China to cut tariffs on Canadian rapeseed after meeting Chinese leader Xi Jinping on January 16, in the first visit by a Canadian leader to Beijing in eight years.
In tandem with the agreement, Canada will allow 49,000 Chinese electric vehicles into its market at a tariff rate of about 6%, down sharply from the current 100%. China will also offer visa-free travel to Canadians, Carney said. The moves marked a stunning reversal from the era of former Prime Minister Justin Trudeau. Under the previous administration, Canada-China ties collapsed following the 2018 extradition spat involving a senior Huawei executive, with China's subsequent detention of two Canadians and years of retaliatory trade measures plunging the relationship into a deep freeze.
"If this marks a genuine about-face for Canada, and not just another reactionary flip-flop then we should acknowledge it as a possible inflection point," said Josef Gregory Mahoney, a professor of international relations at Shanghai's East China Normal University. The centerpieces of the agreement are tariff concessions. Carney anticipates a drop in canola tariffs from 85% to about 15% combined by March 1, citing "a high degree of confidence that that's going to happen."
Following the announcement, canola futures in New York extended gains to 2.6%, reaching their highest level since early December. From a supply chain perspective, this agreement positions Canada as an alternative bridge alongside the USMCA framework in North American agricultural and automotive supply chains. The soft entry of Chinese EV makers such as BYD, NIO, Geely and Chery into the Canadian market structurally increases competitive pressure on the Ontario-based production plans of Ford, GM and Stellantis.
