Canada Shifts Trade Focus to China Amid US Uncertainty

Sat Jan 17 2026 16:04:42 GMT+0200 (Eastern European Standard Time)

In a historic policy shift, Prime Minister Mark Carney announces a trade deal with China, easing tariffs on electric vehicles while acknowledging challenges in the US-China dynamic.

Canada's Prime Minister Mark Carney reveals a notable shift in foreign policy with a new trade agreement with China that eases tariffs on Chinese electric vehicles in exchange for China lowering its tariffs on key Canadian agricultural exports. This decision reflects Canada's intent to establish independent trade relations amidst uncertain ties with the United States. While some view the move favorably, others, including provincial leaders, express concerns over potential impacts on the Canadian auto industry.

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 that the world has changed in recent years, and the progress made with China sets Canada up well for the new world order.

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. Farmers in Moe's province have been hit hard by China's retaliatory tariffs on Canadian canola oil, and the deal, he said, would bring much-needed relief.

But Ontario Premier Doug Ford, whose province is home to Canada's auto sector, was sharply critical of the deal. He stated removing EV tariffs on China would hurt our economy and lead to job losses.

Some experts said the electric vehicle provisions in the trade deal would help China make inroads into the Canadian automobile market. With the lower EV tariffs, approximately 10% of Canada's electric vehicle sales are now expected to go to Chinese automakers.

The deal with China drops Canada's levies on Chinese EVs from 100% to 6.1% for the first 49,000 vehicles imported each year, a quota that could rise to 70,000 in five years.

In exchange, China will cut tariffs on Canadian canola seed to around 15%, down from the current rate of 84%, and remove tariffs on Canadian canola meal, lobsters, crabs, and peas for at least the end of the year.

Carney defended the move by emphasizing the affordability of Chinese vehicles and suggested that the deal may spur Chinese investment into Canada’s auto industry.

This significant step signals Canada’s effort to recalibrate trade relations as uncertainty looms over the North American trade landscape, creating new pathways towards economic resilience.