Canada's Strategic Shift: Navigating New Trade Deal with China

Sat Jan 17 2026 17:15:34 GMT+0200 (Eastern European Standard Time)

Canada's recent trade agreement with China reflects a significant policy pivot under Prime Minister Mark Carney, aimed at securing economic independence amid ongoing tensions with the US. This agreement includes tariff reductions on electric vehicles and agricultural products, marking a noteworthy shift in Canada's foreign policy.

Canada has entered a new trade agreement with China, signaling a strategic shift away from its traditional dependence on the United States. Prime Minister Mark Carney's administration has opted to lower tariffs on Chinese electric vehicles, while China reciprocates by reducing tariffs on Canadian agricultural exports. This deal reflects a reassessment of Canada's trade relationships amid uncertainties with the US. Experts view this as an opportunity for Canada to assert its economic agency, despite mixed reactions within Canada and from Washington.

Prime Minister Mark Carney's new approach to Canada's foreign policy can perhaps be distilled in one line: We take the world as it is, not as we wish it to be. That was his response when asked about the deal struck with China on Friday, despite concerns over its human rights record and nearly a year after he called China the biggest security threat facing Canada.

The deal will see Canada ease tariffs on Chinese electric vehicles that it imposed in tandem with the US in 2024. In exchange, China will lower retaliatory tariffs on key Canadian agricultural products.

Experts told the BBC the move represents a significant shift in Canada's policy on China, one that is shaped by ongoing uncertainty with the US, its largest trade partner. The prime minister is saying, essentially, that Canada has agency too, and that it's not going to just sit and wait for the United States, said Eric Miller, a Washington DC based trade adviser and president of the Rideau Potomac Strategy Group.

Carney told reporters on Friday that the world has changed in recent years, and the progress made with China sets Canada up well for the new world order. Canada's relationship with China, he added, had become more predictable than its relationship with the US under the Trump administration.

In Canada, as daylight broke on Friday, reaction to the deal was swift. Some, like Saskatchewan Premier Scott Moe, hailed it as very good news for farmers impacted by Chinese tariffs on canola oil. In contrast, Ontario Premier Doug Ford criticized the deal, warning it could threaten jobs in Canada’s auto sector by inviting an influx of cheaper Chinese electric vehicles.

The deal will drop Canada's levies on Chinese EVs from 100% to 6.1% for the first 49,000 vehicles imported each year. In exchange, China will cut tariffs on Canadian canola seed to about 15% by March 1, down from 84%. Additionally, China will remove visa requirements for Canadian visitors. Although Carney anticipates this trade will stimulate investment in Canadian manufacturing, experts warn it may also undermine local producers if not paired with domestic support.

As Canada forges ahead with this new direction, it acknowledges the precarious nature of its existing trade agreements with the US and embraces a broader world stage where economic partnerships with countries like China become increasingly essential.