Canada has signed a new trade agreement with China, diverging from the U.S., which imposes a 100% tariff on China-built EVs.

The deal allows a 49,000-vehicle quota for Chinese EVs—less than 3% of Canada’s new-vehicle market—and aims to attract Chinese joint-venture investments to expand Canada’s EV supply chain and clean-tech sector.

The agreement also extends steel and aluminum tariff relief through 2026 and lowers Chinese tariffs on Canadian canola seed from 85% to around 15% by March 2026, improving access for $4 billion in annual exports.

Other Canadian agricultural exports, including canola meal, lobsters, peas, and crabs, will also benefit from reduced tariffs, totaling $2.6 billion in improved market access.

China, Canada’s second-largest trading partner with $118.9 billion in two-way trade in 2024, is targeted for a 50% increase in Canadian exports by 2030.

The two countries will review implementation progress in three years while continuing discussions on additional trade issues.