A major breakthrough has been announced by China and Canada, signaling a new era in their diplomatic relations. This development comes after a critical meeting between Chinese leader Xi Jinping and Canadian Prime Minister Mark Carney in Beijing.
In a move that could reshape global trade dynamics, China has agreed to reduce tariffs on Canadian canola oil from a staggering 85% to a more manageable 15% by March 1st. In return, Canada has committed to taxing Chinese electric vehicles at the most-favored-nation rate of 6.1%.
This deal marks a significant turning point after years of strained ties and retaliatory tariffs. Xi Jinping has hailed this "turnaround" in relations, but it's also a significant victory for Prime Minister Carney, who becomes the first Canadian leader to visit China in nearly a decade.
Carney's efforts to diversify Canada's trade away from its largest trading partner, the United States, have been driven by the uncertainty caused by former President Trump's erratic tariff policies. This deal could also pave the way for increased Chinese investments in Canada, a development that could further shift the balance of power in North America.
Carney's comments suggest that this rapprochement is, in part, a response to Trump's tariffs, which have pushed one of America's key allies closer to its biggest rival. He described Canada's relationship with China as more "predictable" in recent months and praised his talks with Beijing as "realistic and respectful."
However, Carney made it clear that Ottawa does not agree with Beijing on everything. He emphasized Canada's "red lines" in his discussions with Xi, including human rights, concerns over election interference, and the need for clear boundaries.
Observers believe that Carney's visit could set a precedent for other countries worldwide that have been affected by Washington's tariffs. Xi, for his part, has been emphasizing China's stability as a global partner and urging more pragmatic ties, describing it as a "win-win" situation for all.
And indeed, it seems to be working. The South Korean president and the Irish prime minister have both visited Beijing recently, and the UK prime minister and German chancellor are expected to follow suit.
Carney acknowledged the dramatic changes in the world and emphasized that how Canada positions itself will shape its future for decades to come. He had earlier described the Canada-China partnership as setting the stage for a "new world order."
As the Chinese and Canadian delegations met in the Great Hall of the People on Friday, Xi highlighted the importance of healthy and stable relations between the two countries for world peace, stability, development, and prosperity.
Tariffs have been a major point of contention between China and Canada. In 2024, Canada imposed 100% tariffs on Chinese electric vehicles, mirroring similar US restrictions. In response, Beijing levied tariffs on over $2 billion worth of Canadian farm and food products, including canola seed and oil, leading to a 10% drop in Chinese imports of Canadian goods in 2025.
China is Canada's second-largest trading partner, with two-way merchandise trade exceeding C$118 billion in 2024. However, this pales in comparison to Canada's trade with the US, its closest ally, which reached over $761 billion in 2024.
Despite this, economic ties with China are becoming increasingly important for Carney, who emphasized the need to build a more competitive, sustainable, and independent economy in the face of global trade disruptions.
During his visit to Beijing, which began on Wednesday, Carney met with senior executives from prominent Chinese businesses, including an electric vehicle battery maker and an energy giant. On Thursday, the two countries signed several agreements on energy and trade cooperation.
Colin Robertson, a former Canadian diplomat and vice-president at the Canadian Global Affairs Institute, described the visit as a "reset of a relationship" that, while modest in ambition, is more realistic about what can be achieved.
The last Canadian Prime Minister to visit China was Justin Trudeau in 2017, before relations soured in 2018 following Canada's arrest of Meng Wanzhou, the chief financial officer of Chinese tech giant Huawei, at the request of the US. In retaliation, China detained Canadian citizens Michael Kovrig and Michael Spavor on espionage charges, a move widely seen as retaliation for Meng's arrest, which China denied. All three were released in 2021.
In the lead-up to the Carney-Xi meeting, Michael Kovrig wrote on X that the visit should not only focus on warming ties but also on "managing leverage." He described Chinese negotiators as "extremely adroit, calculating, and always looking for leverage," emphasizing the need for disciplined engagement. He also urged Carney to advocate for Canadians imprisoned in China, estimated to be around 100 according to Canadian media.
Speaking to reporters, Carney emphasized that Ottawa will engage with countries that do not share its values in a "narrower, more specific" manner. He highlighted that while Canada and China have "different systems" that limit the breadth of their cooperation, they can still have effective relationships through direct conversations rather than grandstanding.
This new era of cooperation between China and Canada is a complex and nuanced development, and it will be interesting to see how it unfolds and what impact it has on global trade and diplomacy.
