Canada and China - A New Strategic Economic Partnership

HWAD Office Team
Jan 16
4 min read

Canada’s relationship with the United States is facing renewed uncertainty due to escalating

unilateral, hostile trade actions by the Trump administration.

To protect long-term economic stability, Canada is accelerating efforts to diversify trade and strengthen opportunities for Canadian workers and businesses.

China - the world’s second-largest economy with a market of 1.4 billion consumers - offering

significant potential for Canadian exporters across every sector of the Canadian economy.

In an increasingly divided and uncertain world, Canada is building a stronger, more resilient economy, independent of our historic reliance on the United States of America.

The illegal, unjustified, hostile and unreliable trade actions imposed on Canada by US President Donald Trump have forced the Government of Canada to aggressively diversify the Canadian economy to eliminate reliance on American markets. Hamilton is Canada's industrial center and one of the most impacted communities in the country. Hamilton workers deserve a secure future in a rapidly changing global economy. Strategic trade diversification ensures that Canadian industries are not held back by disruptions outside our control. Expanding market access with China and attracting new investment will support jobs and strengthen the industrial economic foundation upon which Hamilton families and businesses rely. MP John-Paul Danko, P. Eng., Hamilton West-Ancaster-Dundas

Prime Minister Mark Carney In China

Prime Minister Mark Carney visited Beijing this week and, earlier today, announced a new strategic partnership with China.

This partnership will deepen cooperation in energy, clean technology, and climate competitiveness, remove trade barriers and tariffs, and accelerate Canadian investment opportunities in China.

The global trading system is undergoing a fundamental change, on which trading powers such as Canada and China have greatly relied. That effectiveness has been greatly reduced. This is happening fast. It's a rupture. It's not a transition. What we do now as Canada, how we position ourselves in the world, will shape our future for decades to come. Canada can thrive in a new system, but to do so, we must be ambitious. We must work at speed and scale to find new partners, to diversify our trade, and attract unprecedented levels of investment in our country. We must be pragmatic. That means we have to understand the differences between Canada and other countries, and then focus our efforts to work together where we are aligned. And it's with this approach that Canada is forging a new strategic partnership with China. China is the world's second-largest economy. It contributes one-third to global growth. It's our second-largest trading partner and our third-largest investor. Two-way trade between our countries amounts to nearly $120 billion a year. There are 400,000 careers across Canada—farmers in the Prairies, manufacturers and engineers in Ontario and Quebec, fish harvesters in Atlantic Canada and British Columbia—that are all supported by trade with China. Twenty billion dollars in wages are earned each year by Canadians because of our existing trade relationship. This is a relationship that has been distant and uncertain for nearly a decade. That has held back investment, stalled business growth, and cost Canadian workers good opportunities. And it has had the consequence of leaving us even more dependent on our largest trading partner. And that's why immediately after the election, Canada's new government began to recalibrate our relationship with China—strategically, pragmatically, and decisively. The Rt. Hon. Mark Carney, Prime Minister of Canada

For further details, including on cooperation in multilateralism and cultural ties, please see the press release.

ELECTRIC VEHICLES AND ENERGY

Canada and China are both energy superpowers focused on expanding two-way energy cooperation – reducing emissions and scaling up investments in batteries, solar, wind, and energy storage.

Within three years, Canada's new partnership with China will drive considerable new Chinese joint-venture investment in Canada - developing trusted partners to protect and create new auto manufacturing careers for Canadian workers, and ensure a robust build-out of Canada’s EV supply chain.

To help deliver the full potential of these partnerships, and build up our domestic manufacturing sector, Canada will allow up to 12% more Chinese electric vehicles (EVs) into the Canadian market at a tariff rate of 6.1% (up to 49,000 vehicles annually from the existing level of 43,000 Chinese vehicles currently imported into Canada every year).

Within five years, more than 50% of Chinese EV imports will have a price of less than $35,000, creating new lower-cost affordable options for Canadian consumers.

TARIFFS AND TRADE

China is Canada's second-largest food agriculture export market - trade foundations based on a longstanding mutually beneficial relationship.

To renew and strengthen that relationship, Prime Minister Carney and President Xi secured a preliminary agreement-in-principle with landmark measures to remove trade barriers and reduce tariffs:

By March 1, 2026, China will lower tariffs on Canadian canola seed to a combined rate of approximately 15%. China is a $4 billion canola seed market for Canadian producers, and this change represents a significant drop from current combined tariff levels of approximately 85%.
Canadian canola meal, lobsters, crabs, and peas will no longer be subject to Chinese tariffs beginning on March 1, 2026.

Canada expects to see a resolution of many long-term trade obstacles for a range of important agricultural sectors, from beef to pet food.

These measures will provide Canadian access to the full potential of the Chinese market of 1.4 billion people, unlocking $3 billion in agricultural food export orders for Canadian workers and businesses.

Through continued partnership and collaboration with China, Canada has set an ambitious goal to further increase total exports to China by 50% by 2030.

STEEL AND ALUMINUM

Canada recognizes that Chinese industrial producers and manufacturers produce steel and aluminum derivative products that are in low supply or have no supply in Canada (meaning they are not made by Canadian producers in sufficient volumes to serve the Canadian economy).

These products are often important supply chain components, supporting the operation of Canadian steel and aluminum manufacturing and fabrication businesses.

Canada will extend to the end of 2026 previous remission measures (reduced tariffs) for strategic Chinese steel and aluminum products that are in short supply in Canada without impacting Canadian industrial producers.

PUBLIC SAFETY AND SECURITY

Canada and China will also expand cooperation between law enforcement agencies to better combat narcotics trafficking, transnational organized crime and cybercrime, synthetic drugs and money laundering – creating safer communities for residents in both countries.