Carney Opens Canada To Chinese Evs, China Cuts Canola Tariffs

Prime Minister Mark Carney is opening the door to more imports of electric vehicles from China with expectations the olive branch will lead to “considerable” Chinese investment in Canada’s auto sector “within three years” — risking potential blowback from Washington.

The move comes as Carney and Chinese President Xi Jinping chart a new era in Canada-China relations and diversify trade ties in response to U.S. President Donald Trump.

“In terms of the way that our relationship has progressed in recent months, with China, it is more predictable,” Carney told reporters in Beijing on Friday when asked about the unreliability of Washington as a trade partner.

The Canada-U.S. relationship is “more multifaceted, much deeper, much broader,” he said.

Carney said through a “preliminary but landmark” deal with China, Canada will allow up to 49,000 Chinese EVs into the country under the most-favored nation tariff rate of 6.1 percent. Under the agreement, the import limit will increase to 70,000 EVs by year five.

“That's a return to levels last seen in 2023 … the last full year before the Canadian tariff actions,” Carney said.

The policy shift marks a reversal in Canadian trade policy from October 2025 when Ottawa moved in lockstep with Washington to implement the 100 percent tariff — a measure that effectively blocked all imports of Chinese EVs.

Mexico’s Senate approved a bill last month to increase its own tariff to 50 percent from 20 to further squeeze imports of Chinese EVs into the North American market as carmakers begin to retool assembly lines to build more electrified models. That tariff went into effect on Jan. 1.

Beijing has agreed in response to reduce its retaliatory tariff on imports of Canadian canola from a combined 85 percent duty rate to “approximately 15 percent” by March 1.

The prime minister brushed off concerns the new Chinese EV quotas pose an existential risk to the Canadian auto sector.

“It's still in low, single-digit proportion of the size of the Canadian auto sector,” Carney said. “Canadians buy about 1.8 million autos a year.”

Trump’s bellicose approach to foreign affairs has forced Ottawa to look to China and the Middle East to grow trade and court foreign investment. The Carney government has set an ambitious goal to double non-U.S. trade in a decade to reduce reliance on the American market.

American and Canadian lawmakers and union leaders have argued in recent years that an influx of cheap Chinese imports endangers the future of the North American industry.

Ontario Premier Doug Ford implored Carney not to drop the tariffs on Chinese EVs for fear of cheap imports flooding the Canadian market.

“We can’t back down, simple as that,” Ford told reporters last week, but revealed the conditions under which he would be comfortable with lowering or scrapping tariffs.

“They want to come and open a big manufacturing facility and employ Unifor employees, well, let's talk. But don't be shipping cars in (that are) not manufactured by Ontarians.”

Canada’s shift on its hawkish policy targeting Chinese EVs doesn’t come out of the blue.

The Carney government launched an informal review of the tariff policy last year as China targeted Canada’s canola industry with punishing tariffs that closed the Chinese market to Canadian growers. The review has unfolded in secrecy, as the federal government declined to confirm its start or end.

The new trade détente with Beijing is another demonstration of the way Carney’s Liberal government is differentiating itself from Justin Trudeau’s era as prime minister, which held more hawkish policies on China.

Trudeau’s former industry minister, François-Philippe Champagne, introduced a national security review targeting Chinese investment in Canadian critical minerals.

Champagne was promoted to finance minister by Carney, but was not part of the federal delegation in China this week.

China is Canada’s second largest trading partner, after the United States, with total annual bilateral trade valued at C$118 billion.