Canada Cuts EV Tariffs in Trade Deal With China

16/01/2026

BEIJING (AP) — Breaking with the United States, Canada has agreed to cut its 100% tariff on Chinese electric cars in return for lower tariffs on Canadian farm products, Prime Minister Mark Carney said Friday.

Carney announced after two days of meetings with Chinese leaders. He said there would be an initial annual cap of 49,000 vehicles on Chinese EV exports coming into Canada at a tariff rate of 6.1%, growing to about 70,000 over five years. China will reduce its total tariff on canola seeds, a major Canadian export, from 84% to about 15%, he told reporters.

“Our relationship has progressed in recent months with China. It is more predictable and you see results coming from that,” Carney said.

Carney hasn’t been able to reach a deal with U.S. President Donald Trump to reduce some tariffs that are punishing some key sectors of the Canadian economy and Trump has previously talked about making Canada the 51st state

Trump commended Carney for making a deal with Beijing.

“Well, it’s OK. That’s what he should be doing and it’s a good thing for him to sign a trade deal. If you can get a deal with China, you should do that,” Trump said.

U.S. Trade Representative Jamieson Greer earlier told CNBC Canada’s decision to allow Chinese EV imports at a low tariff is “problematic” and said that Canada may regret that in the long term.

Earlier Friday, Carney and Chinese leader Xi Jinping pledged to improve relations between their two nations after years of acrimony.

Xi told Carney in a meeting at the Great Hall of the People that he is willing to continue working to improve ties, noting that talks have been underway on restoring and restarting cooperation since the two held an initial meeting in October on the sidelines of a regional economic conference in South Korea.

Carney said that “this agreement will drive considerable Chinese investment in Canada’s auto sector, creating good careers in Canada and accelerating our progress toward a net zero (emissions) future and the auto industry of the future.’'

Nelson Wiseman, professor emeritus of political science at the University of Toronto, called Friday’s deal good for both China and Canada. “Canada is diversifying its bets economically,” Wiseman said. “And China is succeeding in driving a small wedge between Canada and the U.S.’'