Major Reversal: China Tariffs Plunge From 100% to 6.1%

From January 14 to 17, 2026, Canadian Prime Minister Carney paid an official visit to China at the invitation of the Chinese government. The two sides reached broad consensus on deepening economic and trade cooperation and signed the "China-Canada Economic and Trade Cooperation Roadmap." They also formed preliminary joint arrangements for addressing bilateral economic and trade issues, which include two new adjustments to tariffs on electric vehicles and agricultural product imports.

Including a tariff-rate quota agreement for Chinese electric vehicles. Specific details are as follows:

Source: Prime Minister of Canada official website

Canada will allow up to 49,000 Chinese electric vehicles to enter the Canadian market annually, with these vehicles subject to the most-favored-nation tariff rate of 6.1%.

This agreement marks the end of Canada's policy of imposing a 100% tariff on Chinese electric vehicles, transitioning instead to a tariff-rate quota system.

Canada stated that this quota is equivalent to the volume of Chinese electric vehicle exports to Canada prior to the 2023-2024 trade friction, representing less than 3% of the Canadian new car market.

Canada states that this agreement is expected to drive Chinese companies to establish joint ventures in Canada within three years, promoting the development of a local electric vehicle supply chain. Within five years, it aims for over 50% of imported vehicles to be affordable electric vehicles priced under CAD 35,000, providing more low-cost options for Canadian consumers.

Canada stated that China has consistently been Canada's second-largest agricultural export market, and an initial agreement in principle has been reached regarding agricultural trade. The specific details are as follows:

Source: Prime Minister of Canada official website

• Canada anticipates that starting March 1, 2026, China will reduce its tariffs on Canadian canola to approximately 15%, a significant decrease from the current comprehensive tariff rate of around 85%.

• Canada anticipates that, effective March 1, 2026, Canadian canola meal, peas, lobster, and crab will not be subject to related countervailing duties, at least until the end of 2026.

This change is expected to bring in nearly 3 billion Canadian dollars in orders for Canadian exporters.

It is worth noting that on January 16, the People's Bank of China's official website announced the renewal of the bilateral local currency swap agreement between the central banks of China and Canada.

The People's Bank of China and the Bank of Canada have recently renewed their bilateral local currency swap agreement, with the approval of the State Council. The swap size is 200 billion yuan, and the agreement is valid for five years, with the possibility of extension upon mutual consent.

Source: Official website of the People's Bank of China

The People's Bank of China stated that the renewal of the bilateral local currency swap agreement between China and Canada will help strengthen financial cooperation between the two countries, expand the use of local currencies in China-Canada trade, facilitate bilateral trade and investment, and maintain financial stability.

On the same day, a joint statement was released following the meeting between the leaders of China and Canada. It mentioned that both sides welcomed the establishment of a China-Canada financial working group to strengthen communication on financial issues, etc. The working group will report to the co-leaders of the Economic and Financial Strategic Dialogue. The two leaders welcomed the signing of the Third Extension and Amendment Agreement to the Bilateral Local Currency Swap Agreement between the People's Bank of China and the Bank of Canada (RMB/CAD).