Canada agrees to reduce tariffs on Chinese electric vehicles in break with the US

Breaking with the United States, Canada has agreed to reduce its 100% tariff on Chinese electric cars in exchange for lower tariffs on Canadian agricultural products, Prime Minister Mark Carney said Friday.

Carney made the announcement after two days of meetings with Chinese leaders. He said there would be an initial annual cap of 49,000 vehicles on Chinese electric vehicle exports to Canada, which would grow to around 70,000 within five years. China will reduce its total tariff on canola seed, a major Canadian export, from 84% to about 15%, he told reporters.

Carney said China has become a more predictable partner to deal with. that the USthe country’s neighbor and long-time ally.

“Our relationship has progressed in recent months with China. It’s more predictable and you’re seeing results from that,” Carney said.

Carney has been unable to reach a deal with President Trump to reduce some tariffs that are punishing some key sectors of the Canadian economy and Trump has previously spoken about making Canada the 51st state.

The prime minister, speaking outside against the backdrop of a traditional pavilion and a frozen pond in a Beijing park, said the meetings in China have been historic and productive.

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

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

“It can be said that our meeting last year opened a new chapter for improving China-Canada relations,” China’s top leader said.

Carney seeks to improve global governance

Carney, the first Canadian prime minister to visit China in eight years, told Xi that better relations would help improve a global governance system he described as “under great pressure.”

He later told the news conference that the system could give way, at least in part, to cross-country or regional agreements rather than the global ones that have underpinned economic growth in the post-World War II era.

“The question is: What is built in that place? How mosaic is it?” said.

The new reality largely reflects Trump’s so-called America-first approach. The tariffs it has imposed have affected both the Canadian and Chinese economies. Carney, who has met with several major Chinese companies in Beijing, said before his trip that his government is focused on building an economy less dependent on the United States in what he called “a time of disruption to global trade.”

A Canadian businessman in China called Carney’s visit a game-changer, saying it restores dialogue, respect and a framework between the two nations.

“These three things we didn’t have,” said Jacob Cooke, CEO of WPIC Marketing + Technologies, which helps exporters navigate the Chinese market. “The parties did not speak to each other for years.”

Canada had aligned itself with the United States on tariffs.

Canada had followed the United States in imposing tariffs of 100% on electric vehicles from China and 25% on steel and aluminum during the government of former Prime Minister Justin Trudeau, Carney’s predecessor.

China responded by imposing 100% duties on Canadian canola oil and meal and 25% duties on pork and seafood. Last August it added a 75.8% tariff on canola seeds. Taken together, the import taxes effectively closed the Chinese market to Canadian canola, an industry group said. Overall, China’s imports from Canada fell 10.4% last year to $41.7 billion, according to Chinese trade data.

Carney attempted to address the concerns of Canadian automakers and workers by saying that the initial cap on Chinese electric vehicle imports was about 3% of the 1.8 million vehicles sold in Canada annually and that, in return, China is expected to begin investing in the Canadian auto industry within three years.

More than half of Chinese electric vehicles exported to Canada would have an import price of less than C$35,000 ($25,000) within five years, he said, making them affordable to consumers.

“We are building a new part of our automotive industry, building cars of the future in partnership, offering affordable cars to Canadians at a time when affordability is a priority, and doing so at a scale that allows for a seamless transition in the sector,” he said.

“We have a commitment to exchange a small part of the Canadian market. We are waiting for a commitment to invest in Canada. The real leaders of the new industry. So it is an agreement that will create the future of our industry.”

China sees opening under Trump

China hopes Trump’s pressure tactics on allies like Canada will push them to pursue a foreign policy less aligned with the United States.

Carney, however, noted that Canada’s relationship with the United States is much more multifaceted, deeper and broader. Canada and China have different systems and disagree on issues such as human rights, he said, limiting the scope of their engagement even as they seek ways to cooperate in areas of common interest.

The Canadian leader leaves China on Saturday and visits Qatar on Sunday before attending the World Economic Forum annual meeting in Switzerland next week. He will meet with business leaders and investors in Qatar to promote trade and investment, his office said.