Breaking with the United States, Canada has agreed to cut its 100% tariff on Chinese electric cars in return for lower tariffs on Canadian farm products, Prime Minister Mark Carney said.
Carney made the announcement after two days of meetings with Chinese leaders.
He said there would be an initial annual cap of 49,000 vehicles for Chinese EV exports coming into Canada at a tariff rate of 6.1%, growing to about 70,000 over five years.
China will reduce its total tariff on canola seeds, a major Canadian export, from 84% to about 15%, he told reporters.
“Our relationship has progressed in recent months with China. It is more predictable and you see results coming from that,” Carney said.
Carney hasn’t been able to reach a deal with US President Donald Trump to reduce some tariffs that are punishing some key sectors of the Canadian economy and Trump has previously talked about making Canada the 51st state.
Trump commended Carney for making a deal with Beijing.
“Well, it’s OK. That’s what he should be doing and it’s a good thing for him to sign a trade deal. If you can get a deal with China, you should do that,” Trump said.
US Trade Representative Jamieson Greer earlier told CNBC Canada’s decision to allow Chinese EV imports at a low tariff is “problematic” and said that Canada may regret that in the long term.
Carney said that “this agreement will drive considerable Chinese investment in Canada’s auto sector, creating good careers in Canada and accelerating our progress toward a net zero (emissions) future and the auto industry of the future’’.
Nelson Wiseman, professor emeritus of political science at the University of Toronto, called the deal good for both China and Canada.
“Canada is diversifying its bets economically,” Wiseman said.
“And China is succeeding in driving a small wedge between Canada and the United States.”
Carney, the first Canadian prime minister to visit China in eight years, told Xi that better relations would help improve a global governance system that he described as “under great strain”.
Later, he said at the news conference that the system may give way at least in part to country-to-country or regional agreements rather than the global ones that have underpinned economic growth in the post-World War II era.
A Canadian business owner in China called Carney’s visit game-changing, saying it re-establishes dialogue, respect and a framework between the two nations. — AP
