The Canadian government and China have struck a significant deal, described by Prime Minister Mark Carney as a “landmark” agreement. The partnership signifies a realistic and respectful engagement based on mutual interests, according to Carney in a press conference in Beijing. After a decade of strained relations, the two countries have reached an understanding on various aspects of the deal.
Under the agreement, both nations have agreed to adjust tariffs on specific products. Canada will permit 49,000 Chinese electric vehicles into its market at a tariff rate of 6.1%, marking a change from the previous 100% tariff imposed on all Chinese EVs in 2024. In return, China is expected to reduce tariffs on Canadian canola to 15% by March and eliminate tariffs on Canadian canola meal, lobsters, crab, and peas until at least the end of 2026.
Although Canada and China have faced agricultural tariff disputes in the past, the recent tariff issues began over a year ago when Canada announced a 100% tariff on Chinese electric vehicles. This move was influenced by concerns about potential oversupply of subsidized vehicles from China with inferior labor and environmental standards. In response, China imposed tariffs on Canadian canola products, including a 100% tariff on canola oil, canola meal, and peas, as well as 25% tariffs on pork and seafood items.
Prime Minister Carney’s meeting with Chinese President Xi Jinping in October at the Asia Pacific Economic Co-operation summit in South Korea was seen as a pivotal moment in Canada-China relations. Carney emphasized the importance of establishing new partnerships amid shifting global trade dynamics, particularly given the uncertainties in U.S. trade policies.
With the Canada-China deal concluded, attention now turns to the U.S. response as all three countries prepare to review the Canada-U.S.-Mexico Agreement (CUSMA). Notably, President Trump has expressed positivity towards the deal, contrasting with concerns raised by some U.S. officials about the implications of the agreement on American industries.
While the deal has received mixed reactions from Canadian premiers, with some viewing it as a positive step for trade relations, others have expressed reservations. Saskatchewan Premier Scott Moe welcomed the agreement, especially for the agriculture sector, while Ontario Premier Doug Ford criticized the deal for potentially impacting the auto industry negatively.
The deal has divided opinions within various industries, with the agricultural sector and farmers welcoming the agreement for providing certainty, while the auto industry voices concerns over risks associated with engaging with China in the current economic climate. Notably, Unifor, Canada’s largest private-sector union, has criticized the agreement, citing potential threats to Canadian auto jobs and trade practices.
