CANADA-CHINA TRADE RESET
SIX MONTHS LATER: WHAT HAS REALLY CHANGED?
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Following escalating trade tensions since 2024, Prime Minister Carney’s January 2026 visit to China produced a notable attempted “reset” in Canada-China trade relations. The tariff measures agreed to as part of that reset took effect on March 1, 2026.
Six months later, significant trade barriers remain, and in this International Trade Report, we canvas the notable issues for both Canadian and Chinese businesses looking to benefit from this reset.
Canada’s Trade Skirmish with China
As previously reported here, Canada’s 2024 decision to impose a 100% surtax on Chinese electric vehicles (“EVs”), together with 25% surtaxes on certain Chinese steel and aluminum products, was followed by a series of Chinese retaliatory measures targeting Canadian agricultural and seafood exports.
A 2026 Reset in Trade Relations
This trade skirmish — not quite a “war” — led to a January 2026 Canada-China “reset” providing a framework for unwinding some of those measures, with China reducing its anti-dumping duty on Canadian canola seed from 75.8% to 5.9%, and suspending its retaliatory tariffs on Canadian canola meal, peas, lobster and crab through December 31, 2026.
Canada reciprocated by opening an annual quota allowing 49,000 Chinese EVs to enter at the ordinary 6.1% MFN tariff, without the additional 100% surtax. Canada has also extended and expanded surtax remission for certain Chinese steel and aluminum products.
Six Months Later: Not Quite Free Trade
These measures were implemented beginning March 1, 2026. Six months later, however, Canada and China remain far from normalized free trade.
For example, Chinese retaliatory tariffs remain on Canadian canola oil, pork and certain fish and seafood products. Canada also continues to maintain economic and national-security restrictions affecting trade with China.
Global Affairs Canada has described the January reset not as a new trade agreement, but as an “unwinding of unilateral actions” between the two countries. While Canada may be pursuing a deliberate trade diversification strategy, with China included as an important part of that strategy, free trade does not yet exist.
relief, but not free trade.
Canadian & Chinese importers and exporters can
benefit from some select trade measures.
Takeaway
Canada’s “trade reset” with China has translated into improved market access in select sectors, improving trade for Canadian and Chinese businesses alike. Unfortunately, the reset has not produced stable or fully free Canada-China trade conditions.
While some previously prohibitive barriers have disappeared or been substantially reduced, many others remain firmly in place. The name of the game will be focusing on actual tariff measures in place to gain trade advantage.
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