On January 16, Canada and China announced (Canada Link) (China Link) a new “strategic partnership”, which promises to alleviate tariffs levied by Canada on Chinese EVs and tariffs levied by China on Canadian agricultural products (Partnership). The Canadian sectors poised to benefit from the Partnership, and efforts to increase trade and investment in Canada are: energy; forestry; autos; agriculture; and tourism. The Economic and Trade Cooperation Roadmap is available here and the backgrounder is available here.
Background
As Canada’s relationship with its largest trading partner, the United States, has deteriorated and North America’s keystone free trade agreement is schedule for review in 2026, Canada is seeking to diversify its trade partnerships and spur new investment into the country. Canada’s delegation to China represents a significant thaw in relations; a Canadian Prime Minister has not visited China since 2017 – shortly after Canada announced exploratory discussions on a possible Canada-China FTA and a new chapter in the Canada-China strategic partnership. Currently, Chinese origin goods are targeted by Canadian surtaxes: Chinese steel and aluminum have been subject to 25% tariffs since October 2024, steel melted and poured in China has been subject to 25% tariffs since July 2025, Chinese EVs have been subject to 100% tariffs since October 2024. Chinese investment has faced its own barriers: in 2022, Chinese companies were subject to forced divestitures under the Investment Canada Act and Canada implementation prohibitions on Canadian telecommunications companies purchasing 5G equipment from Huawei and ZTE.
China has targeted Canadian goods by levying tariffs on Canadian seafood, canola, and pork products following its conclusion of an anti-discrimination investigation in 2025. These tariffs added to further import measures implemented by China and ongoing investigations against Canadian-origin goods, including: SPS import measures on certain beef and poultry products; and the anti-dumping investigations focused on Canadian origin canola seeds initiated by MOFCOM in September 2024 and Canadian origin pea starch in August 2025.
Partnership Aims
The Partnership will imminently usher-in negotiated resolutions to Canada’s tariffs on Chinese EVs and Chinese anti-discrimination tariffs on Canadian agricultural products (time limited) and an ongoing anti-dumping investigation into canola seed. China and Canada aim to increase trade by 50% in the next four years, by 2030.
EVs: Canada is permitting imports of 49,000 Chinese EVs at a MFN rate of 6.1%. The volume corresponds to 2023-2024 imports, which represents less than 3% of the Canadian market for new vehicles. As Canada’s auto industry continues to suffer under U.S. section 232 tariffs, the Prime Minister hopes to drive Chinese JV investment into Canada to create jobs and bolster its EV supply chain – the very industry the 100% tariffs were meant to protect.
Agriculture: China appears to be willing to resolve an ongoing anti-dumping investigation into exports of Canadian origin canola seeds and has promised to lower tariffs on Canadian canola seed to a combined rate of approximately 15% by March 1, 2026. Canadian canola seed is currently subject to a 75.8% provisional duty (as of August 14, 2025) under the ongoing anti-dumping investigation. China has also promised to eliminate its anti-discrimination tariffs on canola meal, lobsters, crabs and peas, from March 1, 2026 to December 31, 2026. The limited timeline for eliminating the anti-discrimination tariffs is related to Canada’s existing surtaxes on Chinese origin steel and the limited remission available until December 31, 2026. Statements by the Prime Minister have also focused on the resolution of current trade irritants related to exports of Canadian beef and pet food. There are no reports on the status of MOFCOM’s anti-dumping investigation concerning pea starch.
Steel: While Canadian tariffs on Chinese steel, aluminum, derivative steel products and steel melted and poured in China remain in place, Canada has committed to extending its previous remission measures for tariffed products that are in short supply in Canada (i.e. that are in low or have no Canadian domestic supply). This means that 11 tariff lines of product-specific full remissions and 55 tariff lines of partial remissions and 49 tariff lines of company specific remissions will remain available until December 31, 2026. Canada has also promised to expand its remissions to cover 7 additional steel products, 2 additional aluminum products and 4 additional derivative products, retroactive to January 1, 2026. At the time of publication, these precise products were not yet announced. Importers should watch this Customs Notice for updates. The Order in Council will be amended by March 1, 2026.
The Partnership also aims to achieve the following:
- Reinvigorate the high-level Canada-China Economic and Financial Strategic Dialogue
- Expand bilateral trade, strengthen two-way investment, and deepen cooperation certain sectors through the following:
- Canada-China Joint Economic and Trade Commission (JETC)
- Canada-China Economic and Trade Cooperation Roadmap
- Canada-China Joint Agriculture Committee
- Support two-way investment and trade in clean and conventional energy through the Ministerial Energy Dialogue
- Collaboration through a Financial Working Group
- Strengthen law enforcement in respect of illegal synthetic drugs
- Improve movement of Canadians to China (a promise of visa-free travel for Canadians)
- Commitments to multilateralism and continuation of international (WTO) and regional organizations (APEC) that govern global trade
Seven MOUs were signed to kickstart these aims.
Baker McKenzie is closely following this new chapter in Canada-China relations and is poised to assist businesses on assessing investment opportunities through its global corporate commercial and trade teams based in Toronto (Canada), Shanghai (China), Beijing (China), Shenzhen (China).
Frank Pan is a partner and Tina Li is an associate of FenXun Partners who is a premier Chinese law firm. FenXun established a Joint Operation Office with Baker McKenzie in China as Baker McKenzie FenXun which was approved by the Shanghai Justice Bureau in 2015.
