Canada and China have agreed to cut tariffs on electric vehicles and key agricultural products as part of a broader reset in relations, marking what Prime Minister Mark Carney called a new strategic partnership capable of delivering “historic” gains for both countries on Friday during talks with Chinese President Xi Jinping.

Carney, the first Canadian prime minister to visit China since 2017, said the timing of the initiative was significant as global politics become increasingly divided. He called for cooperation in areas such as agriculture, agri-food, energy and finance, where he said progress could be swift and sustained. “It is important to start this new strategic partnership at a time of division,” Carney told Xi, adding that these sectors offered the greatest potential for immediate and long-term benefits for both countries.

Xi welcomed the initiative, saying he looked forward to working with Carney to improve bilateral ties with a sense of responsibility to both nations and the wider world. In a joint statement carried by China’s state media, the two sides pledged to restart high-level economic and financial dialogue, boost trade and investment, and strengthen cooperation in agriculture, oil, gas and green energy.

The Deal

Under the deal, Canada will initially permit imports of up to 49,000 Chinese electric vehicles at a tariff of 6.1%, a dramatic reduction from the 100% tariff imposed in 2024 by the previous Canadian government. In 2023, China exported more than 41,000 EVs to Canada. Carney did not specify the timeframe for the quota.

“This is a return to levels prior to recent trade frictions, but under an agreement that promises much more for Canadians,” Carney told reporters, adding that closer cooperation with China would help Canada build a competitive domestic EV sector through access to supply chains, innovation and increased demand.

Carney said the EV agreement is expected to drive “considerable” Chinese investment into Canada’s auto industry, create jobs and support the country’s push toward a net-zero future. He also pointed to opportunities for cooperation in clean energy storage and production.

On agriculture, Canada expects China to lower tariffs on canola seed by March 1 to a combined rate of about 15%, down from current levels of roughly 84%. China is a $4 billion market for Canadian canola seed. Tariffs on canola meal, as well as lobsters, crabs and peas, are also expected to be removed from March 1 until at least the end of the year.

Carney said the measures would unlock nearly $3 billion in export orders for Canadian farmers, fish harvesters and food processors. Retaliatory Chinese tariffs imposed last year had contributed to a 10.4% decline in China’s imports of Canadian goods in 2025.

Efforts of Diplomacy

The visit follows months of diplomatic efforts by Ottawa to rebuild relations with its second-largest trading partner after the United States, after earlier tensions strained bilateral ties. It also comes as Canada seeks to diversify trade following U.S. tariffs imposed by President Donald Trump on some Canadian goods, along with comments suggesting Canada could become the United States’ 51st state.

China, which has also been hit by U.S. tariffs since Trump’s return to the White House, has signaled interest in closer cooperation with a Group of Seven country traditionally aligned with Washington.

As reported in Reuters, while analysts say the rapprochement could influence the broader dynamics of Sino-U.S. rivalry, they caution that Canada is unlikely to pivot strategically away from the United States, given its deep integration into U.S.-led security and intelligence frameworks.

Canada’s outreach to China comes as Ottawa seeks to diversify trade amid strains with the United States, including tariffs imposed by President Donald Trump and comments suggesting Canada could become the U.S.’s 51st state. China, also facing U.S. tariffs, has shown interest in strengthening ties with a Group of Seven country traditionally aligned with Washington.

Carney said Canada plans to double its energy grid over the next 15 years and is open to Chinese investment in areas such as offshore wind. He also said Canada is scaling up liquefied natural gas exports to Asia, with plans to produce 50 million tonnes annually by 2030, all destined for Asian markets.