China and Canada have agreed to scale back tariffs following a closely watched meeting in Beijing between President Xi Jinping and Prime Minister Mark Carney, signalling a tentative reset in relations after several years of strain.

As a result, Beijing will now slash duties on Canadian canola oil from 85% to 15% starting in March according to the BBC. In return, Canada will also use a most-favoured-nation tariff rate of 6.1% to a limited number of Chinese electric vehicles (EVs). The agreement marks the most significant breakthrough between the two sides since their relationship deteriorated in the late 2010s, and is largely seen as a reflection of the issues both are having with the US.

For Carney, the first Canadian leader to visit China in almost a decade, the deal supports his broader push to diversify trade away from the US amid continuing uncertainty over American tariff policy. The easing of tensions with Beijing also opens the door to a limited revival of Chinese investment in Canada, a prospect closely watched in Washington.

The BBC adds that the agreement follows a prolonged trade dispute. In 2024, Canada imposed steep tariffs on Chinese electric vehicles, mirroring measures taken by the US. Beijing responded by levying duties on more than $2bn of Canadian agricultural and food exports, including canola products, contributing to a sharp fall in Chinese imports from Canada last year.

As part of the new framework, Canada will allow up to 49,000 Chinese EVs to enter at the lower tariff rate, reflecting domestic concerns about an influx of cheaper imports. China will also reduce duties on other Canadian exports such as lobsters, crabs and peas.

Beyond tariffs, the visit underscored a more pragmatic tone on both sides. Carney has emphasised the need for clear boundaries in the relationship, particularly on issues such as human rights, election interference and geopolitical tensions, while still pursuing cooperation where interests align. Chinese officials, for their part, have sought to present Beijing as a stable and predictable partner at a time of global trade fragmentation.

China is Canada’s second-largest trading partner, though trade volumes remain far below those with the US. During his trip, Carney met senior executives from major Chinese companies and oversaw the signing of several agreements covering energy and trade cooperation.