Canada is cozying up to China as it looks to loosen its economic dependence on the U.S., a shift prompted in part by President Donald Trump’s aggressive trade policies against America’s northern neighbor. As a result, more Chinese EV’s are coming to North America very soon.
Prime Minister Mark Carney announced today in Beijing that Canada is forming a new strategic partnership with China. To kick off the partnership, Canada will slash tariffs on Chinese electric vehicles and allow up to 49,000 Chinese-made EVs into the Canadian market.
The move marks a sharp break with the U.S., which imposed a 100% tariff on Chinese EVs in 2024, a move Canada matched soon afterward.
Canada expects the deal will spur new Chinese investment at home, particularly in the auto sector.
“It is expected that within three years, this agreement will drive considerable new Chinese joint-venture investment in Canada with trusted partners to protect and create new auto manufacturing careers for Canadian workers, and ensure a robust build-out of Canada’s EV supply chain,” the Prime Minister’s Office said in a press release.
In exchange, China is set to lower tariffs on Canadian canola seed, one of its major agricultural exports, to a combined rate of roughly 15%, from 85%, starting March 1.
Canada has also set a goal of increasing exports to China by 50% by 2030.
The pivot represents a major bet on China, even as the U.S. remains Canada’s most important trading partner. In 2024, China was Canada’s second-largest single-country trading partner, with $118.9 billion in two-way merchandise trade. That figure, however, is only a fraction of Canada’s trade with the U.S., which totaled an estimated $762 billion that same year.
Still, Canada seems willing to look past that gap amid Trump’s escalating trade rhetoric and policies, including talk of making Canada the U.S.’s 51st state. Trump has imposed tariffs on several Canadian goods, including duties of up to 35% on certain products not covered by the United States–Mexico–Canada Agreement, as well as steel tariffs that reach as high as 50%. The USMCA itself is set to come under review later this year.
Carney told reporters on Friday that while Canada’s relationship with the U.S. is deeper, broader, and more multifaceted than its ties with China, relations with Beijing have improved in recent months and have become “more predictable.”
Canada and China have had a strained relationship over the past decade, particularly after Canadian authorities arrested Huawei CFO Meng Wanzhou in 2018 at the request of the U.S.
When asked about Canada’s new deal, Trump tried to play it cool.
“That’s OK. That’s what he should be doing. I mean, it’s a good thing for him to sign a trade deal. If you can get a deal with China, you should do that,” Trump said, according to The Hill.
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