Canada, China reach deal to cut tariffs

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 Friday.

- By Ken Moritsugu AND RoB GILLIES

WORKERS assemble a car frame for electric vehicle maker Zeekr at a factory in Ningbo, China. Canada has agreed to cut its 100% tariff on Chinese electric cars.

(KEVIN FRAYER Getty Images)

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 on 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 President 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.

U.S. 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.

Earlier Friday, Carney and Chinese leader Xi Jinping pledged to improve relations between their two nations after years of acrimony.