Canada And China Reach Preliminary Trade Agreement

As Connecting the Dots reported last week, Canadian Prime Minister Mark Carney was in Canada last week meeting with Chinese leaders on international trade policy and other matters. After two days of discussions, Prime Minister Carney announced that his government had reached a “preliminary agreement-in-principle” on several trade issues.

Broadly, as a result of the discussions, Canada will set an ambitious new goal to increase its exports to China by 50 percent by 2030. More specifically, and regarding industrial metals, Canada will:

• Extend through 2026 its previous remission measures for certain Chinese steel and aluminum products that are in short supply in Canada. This policy covers 66 lines of product-specific remissions and 59 tariff lines of company-specific remissions.
• Expand remissions coverage to seven steel, two aluminum, and four steel derivative products. This expansion will enter into force by March 1, 2026, and be retroactive to Jan. 1, 2026.

The government said these measures “cover steel, aluminum, and derivative products that are in low or have no supply in Canada, meaning they are not made by Canadian producers in sufficient volumes to serve the Canadian economy.”

Prime Minister Carney also announced his government would reduce its 100 percent tariff on Chinese electric vehicles (EVs) in return for a reduction in tariffs on Canadian farm products. That tariff rate cut will come with an initial cap on Chinese EV exports of 49,000 vehicles. Within five years, that cap would expand to 70,000 vehicles. In a fact sheet, the Canadian government pledged, “

As part of this agreement, there will an opportunity to review its progress and implementation in three years to assess and confirm if all expected Canadian benefits have materialized as anticipated.” That fact sheet also noted, “Canada and China have also agreed to continue work in coming months on additional trade irritants of economic importance.” Read more about this agreement at NPR.

As the BBC reported, when asked about the agreement with China, Prime Minister Carney told reporters that “the world has changed” in recent years, and that the progress he had made with China sets Canada up “well for the new world order.” The prime minister also said Canada’s relationship with China has become “more predictable” than its relationship with the United States under the Trump administration. Later, on social media, Prime Minister Carney explained that the Canadian government is “recalibrating” its relationship with China, “strategically, pragmatically, and decisively.”