China and Canada have forged a significant agreement to reduce trade barriers and re-establish diplomatic ties, marking a notable shift in Canadian foreign policy under Prime Minister Mark Carney. This move signals a departure from alignment with former Prime Minister Justin Trudeau's administration and a divergence from President Donald Trump’s trade agenda.

Prime Minister Carney announced that China is expected to cut tariffs on Canadian rapeseed, also known as canola, following his meeting with Chinese leader Xi Jinping in Beijing. This historic visit, the first by a Canadian leader in eight years, anticipates a reduction in canola tariffs from over 80% to approximately 15% by March 1, which has already led to gains in canola futures. Beijing will also suspend anti-discrimination duties on other Canadian farm products like canola meal and lobsters until at least the end of 2026.

In a reciprocal move, Canada will permit 49,000 Chinese electric vehicles (EVs) into its market at a reduced tariff rate of about 6%, significantly down from the previous 100% levy that was enacted in 2024 to align with US trade policy. China will also offer visa-free travel for Canadian citizens. While the number of EVs is a small fraction of the Canadian market, this decision indicates Carney's intent to chart an independent course, drawing criticism from figures like Ontario Premier Doug Ford, who expressed concerns about its impact on Canadian workers.

This thawing of relations stands in stark contrast to the era of former Prime Minister Justin Trudeau, during which Canada-China ties deteriorated following the 2018 extradition dispute involving a senior Huawei executive. This event led to China's detention of two Canadians and years of retaliatory trade measures, plunging the relationship into a "deep freeze." Carney's efforts to warm relations with Xi suggest a new strategic direction for Canada, traditionally a close partner of Washington.

Experts view Carney's actions as a potential inflection point. Josef Gregory Mahoney of Shanghai’s East China Normal University suggested it could be a "genuine about-face" for Canada. Carney himself emphasized a "new strategic partnership" with Xi, referencing the global instability and "new world order" potentially influenced by President Trump’s foreign policy. Dylan Loh of Nanyang Technological University interpreted Carney’s comments as an endorsement of China and an indictment of the US, though Trump’s public reaction was surprisingly positive, stating, “That’s OK, that’s what he should be doing.”

The detente with China also occurs amidst Trump’s broader trade conflicts, which have affected allies and adversaries alike, and ahead of difficult USMCA negotiations between Canada, Mexico, and the US. Mahoney speculated that drawing closer to China could provide Carney with leverage in these talks with Washington, especially given US pressure on its neighbors to restrict Chinese products. Carney has frequently described the Canada-US relationship as having suffered a historic "rupture," advocating for a new approach to China "adapted to new global realities."

Chinese leader Xi Jinping expressed optimism about the "positive results" in restoring ties, noting that a "healthy and stable development of China-Canada relations serves the common interests of our two countries and is also conducive to world peace, stability and prosperity." A joint statement confirmed plans to expand trade, strengthen investment, and deepen cooperation in various sectors including energy, finance, public security, and people-to-people exchange. Canada also reaffirmed its commitment to its long-standing One-China Policy.

Despite the positive overtures, Carney is navigating a delicate balance. Vina Nadjibulla of the Asia Pacific Foundation of Canada characterized the visit as a move toward a "pragmatic foreign policy" prioritizing economics while de-emphasizing traditional irritants. She highlighted a selective engagement focused on economic and trade foundations, with sectors like defense and artificial intelligence remaining under strict guardrails. Canada's Industry Minister Melanie Joly, who in 2022 had labeled China an "increasingly disruptive global power," now seeks stability in the relationship, even remarking on the predictability of conversations with China compared to other nations, including their neighbor.