China, Canada Move Closer on Trade With New Strategic Partnership

China and Canada are taking a significant step toward repairing and deepening their economic relationship, agreeing to ease key trade barriers under what both sides are calling a new “strategic partnership,” according to The Wall Street Journal.

The agreement, reached following talks in Beijing between Canadian Prime Minister Mark Carney and Chinese President Xi Jinping, includes plans to lower tariffs on Chinese electric vehicles entering Canada and sharply reduce Chinese duties on Canadian canola seeds. The move comes as both countries grapple with escalating trade tensions and uncertainty stemming from U.S. trade policy.

Carney said the deal reflects Canada’s need for a more pragmatic approach in a global trading system he described as increasingly fragmented. Beijing, for its part, is seeking to strengthen ties with countries affected by what it views as Washington’s protectionist and unpredictable trade measures.

The Canadian prime minister has previously declared that Canada’s traditionally close economic relationship with the United States has effectively ended, arguing that recent developments have made ties with China more “predictable” than those with Washington.

According to The Wall Street Journal, the meeting marks a notable shift after years of strained relations dating back to 2018, when Canada arrested a senior Huawei executive at the request of U.S. authorities, triggering a sharp diplomatic and economic backlash from Beijing.

Despite the renewed momentum, the newspaper cautioned that China is unlikely to replace the United States as Canada’s primary economic partner. Bilateral trade between Canada and China totaled about $80 billion last year, compared with nearly $1 trillion in trade between Canada and the U.S.

For Beijing, improved relations with Ottawa support its broader effort to portray itself as a stable global power and a reliable partner for U.S. allies disillusioned with American trade policies. For Canada, facing rising U.S. tariffs and growing trade barriers, the outreach to China is part of a strategy to diversify export markets, particularly toward its second-largest trading partner.

Still, the rapprochement presents political and economic challenges for Ottawa. Canadian policymakers must balance expanded export opportunities for farmers against concerns about protecting the domestic auto industry from an influx of low-cost Chinese electric vehicles.

Under the new framework, Canada will allow up to 49,000 Chinese-made electric vehicles into its market under a most-favored-nation tariff of 6.1%, a sharp contrast to the current duties that can reach as high as 100%.

A statement from the Canadian prime minister’s office said the agreement is expected to attract joint Chinese investments in Canada over the next three years, involving what it described as “trusted partners,” while safeguarding and creating jobs in the country’s auto sector.

On the Chinese side, Beijing is expected to cut tariffs on Canadian canola seeds to around 15% by March 1, down from nearly 85%, and to lift restrictions on several other Canadian agricultural products.

Canadian officials estimate that the combined measures could unlock export orders worth nearly $3 billion, delivering tangible benefits to Canadian workers and businesses and signaling a renewed, if cautious, phase of economic cooperation between the two countries.