Canada's New Trade Deal with China Marks Shift from US Dominance

Sat Jan 17 2026 17:30:03 GMT+0200 (Eastern European Standard Time)

Prime Minister Mark Carney's administration signals a shift in Canada’s foreign policy with a new trade deal with China, easing tariffs amid changing dynamics with the US.

In a notable shift in foreign policy, Canada's Prime Minister Mark Carney has announced a new trade agreement with China that involves significant tariff reductions. The deal will lessen the tariffs on Chinese electric vehicles while China will reciprocate by lowering tariffs on key Canadian agricultural products. This move reflects Canada's evolving relationship with China amid continuing uncertainties with its historical ally, the United States.

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

Canada's relationship with China, he added, had become more predictable than its relationship with the US under the Trump administration.

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 hard hit 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 said removing EV tariffs on China would hurt our economy and lead to job losses.

The expected increase in Chinese EV sales could put pressure on US-based EV makers like Tesla that are seeking to expand their market share in Canada.

Meanwhile, the White House response has been mixed, with U.S. Trade Representative Jamieson Greer calling the deal problematic, while President Trump mentioned it could be a good thing.

For Carney, Friday's deal may just be the first step in a recalibration of Canada's trade relations.