Azernews.Az

Prime Minister Mark Carney signaled a major shift in Canada-China trade relations on Friday, announcing plans to allow up to 49,000 Chinese electric vehicles (EVs) into Canada under the most-favored-nation tariff of 6.1 percent, a figure set to rise to 70,000 by year five, Azernews reports.

The move is expected to attract “considerable” Chinese investment in Canada’s auto sector within three years, Carney said, even as it risks friction with Washington.

Speaking in Beijing, Carney framed the deal as part of a broader effort to diversify Canada’s trade partnerships in the wake of what he described as an “unreliable” U.S. approach under President Donald Trump. “In terms of the way that our relationship has progressed in recent months with China, it is more predictable,” Carney said. He also emphasized the depth of Canada-U.S. ties, calling the relationship “more multifaceted, much deeper, much broader.”

The policy reversal marks a departure from October 2025, when Ottawa imposed 100 percent tariffs on Chinese EVs in alignment with Washington, effectively halting imports. Carney noted that the new quotas return imports to 2023 levels, prior to the tariff restrictions.

The announcement coincides with recent protectionist moves in North America. Mexico’s Senate last month raised its own Chinese EV tariff to 50 percent from 20, as automakers adapt assembly lines for electrified models. In return, China has agreed to reduce retaliatory tariffs on Canadian canola from a combined 85 percent to around 15 percent by March 1, easing long-standing trade tensions between the two countries.

While critics—including Ontario Premier Doug Ford and Canadian union leaders—warn that Chinese EVs could threaten the domestic auto industry, Carney downplayed the risk, noting that the quota represents a low single-digit proportion of Canada’s auto market, where Canadians purchase about 1.8 million vehicles annually. Ford emphasized that imports must be tied to new manufacturing and employment in Ontario to be acceptable.

The shift follows an informal review of Canada’s tariff policy launched last year, driven in part by China’s punitive tariffs on Canadian canola. Carney’s government is seeking to reduce reliance on the U.S. market and double non-U.S. trade within a decade, while attracting foreign investment.

Observers note that the new détente with Beijing marks a clear divergence from policies under Justin Trudeau, which were more hawkish on Chinese investment, including national security reviews targeting critical minerals. Carney’s approach signals a more pragmatic, investment-focused strategy.

China remains Canada’s second-largest trading partner, after the United States, with bilateral trade valued at C$118 billion annually, making the EV deal a potentially significant lever for strengthening economic ties and attracting capital to Canada’s auto sector.