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On January 13, 2026, Prime Minister Mark Carney made his first official visit to the People's Republic of China, Canada's second-largest single-country trading partner. This visit followed a year in which the two countries imposed retaliatory tariffs on key exports, including Chinese steel, aluminum and electric vehicles, and Canadian agri-food products. In an effort to build a more independent and resilient economy through diverse trade partnerships, the Canadian federal government has announced a new "strategic partnership" with China, resolving recent trade disputes and forging a stronger relationship across several economic sectors. Here are the key takeaways that Canadian and Chinese businesses should be aware of as the two countries forge ahead with renewed strategic alignment.
1. Consensus achieved
While the strategic partnership established between Canada and China following Prime Minister Carney's visit does not include a conclusive agreement on trade or bilateral investment, key areas of consensus that are important to both economies were established. Principal areas of alignment between the two nations include positions on energy, clean technology and climate competitiveness.
The renewed Canada-China relationship has significant short-term impacts for key sectors of the Canadian economy and opens the door for longer-term investment opportunities. The visit resulted in six initial cooperation agreements covering areas including energy, crime, culture, forestry and food safety, some of which are detailed below.
2. Agricultural and food products – big win for Canadian canola
Canada and China have committed to resolving outstanding issues regarding trade in agri-food products. The Canadian federal government expects that duties on canola seed will drop from 84% to 15% by March 1, 2026, directly improving access for Canadian canola seed producers to a Chinese market that is worth approximately CA$4 billion annually. Moreover, Canadian canola meal, lobsters, crabs and peas will be exempt from China's "anti-discrimination" tariffs from March 2026 until the end of the year, potentially unlocking nearly CA$3 billion in exports this year for the farm and seafood sectors. China is also expected to increase its imports of other Canadian products, such as beef and pet food. Notably, market access for Canadian beef in China, which was previously suspended in 2021, appears to have already been lifted. It has been reported that Chinese orders for canola and beef have already been made.
3. Chinese EVs are making their way to Canada
As part of the advancements achieved during the recent meetings between the Canadian and Chinese governments is a major development in the world of EVs. Inexpensive yet high-quality EVs have taken over the Chinese market in recent years. Canadian car owners will soon be able to tap into the rapidly emerging Chinese EV offering. Canada announced that it will allow 49,000 Chinese electric vehicles into the Canadian market at the most-favoured-nation tariff rate of 6.1%, representing 3% of the Canadian market for new vehicles. By 2030, Canada intends to reserve 50% of the quota for EVs that cost CA$35,000 or less to import, prioritizing the availability of more affordable models in Canada. This marks a monumental shift in what has thus far been a protectionist North American EV market. The Government of Canada hopes that this market access agreement will spur Chinese-Canadian joint ventures for EV manufacturing in Canada.
4. Continued relief for Chinese steel and aluminum
To address domestic supply shortages, Canada announced that it will, over the next year, extend previous remission measures for certain Chinese steel and aluminum products and expand their coverage to include several derivative products, thereby ensuring greater availability for the Canadian economy. While steel products have relief from certain tariffs, Chinese imports of steel will remain subject to Canada's newly imposed Tariff Rate Quota for steel goods, as well as antidumping and countervailing duties.
5. Canadian lumber in China
Canada, British Columbia, and China signed a Memorandum of Understanding on Cooperation on Modern Wood Construction. The agreement aims to strengthen technical exchanges on modern wood construction and develop an "industrial chain" for wood construction. This creates the potential for processed Canadian lumber to enter the Chinese market on a large scale as China continues to encourage greater use of wood in the construction of large urban buildings.
6. Bilateral energy investment
The two countries signed a memorandum of understanding to foster bilateral investment in both renewable and non-renewable energy. They also committed to collaborating on the development of responsible civil nuclear energy and cooperating in the trade of natural uranium.
7. Positive signals for Chinese inbound investment in major Canadian clean energy, agriculture and consumer projects
It was announced by the Prime Minister's office that the two countries had formally engaged in discussions regarding the enhancement of two-way investment in clean energy and technology. The Prime Minister himself stated that he would welcome Chinese business plans to increase their investment in Canada's major clean energy, agriculture and consumer projects. This marks an important informal reopening of the Canadian investment opportunities for Chinese companies; this may be a signal that Chinese entities would encounter fewer barriers to investment (including potentially in terms of the application of the foreign investment law rules under the Investment Canada Act by the Canadian Government).
8. Increase in trade
In addition to the above, Canada has stated its intention to increase exports to China by 50% by 2030. This would be a considerable increase in exports to China, and would impact a range of goods, notably energy goods.
9. How do the Chinese feel about the new dawn of Canadian-Chinese economic relations?
Overall, the Chinese side believes that Prime Minister Carney's visit is an important signal that China–Canada relations have stopped deteriorating and are beginning to improve. It indicates that both sides have the willingness to restore and strengthen cooperation, to overcome their differences on the basis of mutual respect and equality for mutual benefit, to promote the bilateral relationship in a positive direction and to achieve win–win outcomes. In particular, on economic, trade and global issues, both sides recognize the areas where their common interests lie. Analysts believe that Prime Minister Carney's visit carries "ice‑breaking" significance. The improved relations between the two countries following the meetings between Prime Minister Carney and President Xi Jinping have been further acknowledged by Chinese government officials who, at the time of this publication, have signaled that a 30-day unilateral visa waiver for Canadians is under active consideration. Canada is ultimately viewed as undergoing a "strategic shift" as it pertains to China, a shift that may serve as a model for other countries around the world currently facing the impact and threat of tariffs.
10. US reaction to the Canada-China announcement
Since the announcement and Prime Minister Carney's summit speech at the World Economic Forum in Davos, President Trump has noted on social media that if Canada makes a "deal with China it will immediately be hit with a 100% tariff against all Canadian goods and products coming into the U.S.A." Since that time, the Government of Canada has clarified that it had not entered into a Free Trade Agreement with China as understood in trade law and specifically the CUSMA, and that it had no intention to do so. At the time of writing, the US has taken no formal measures to implement the online threat. With the forthcoming CUSMA negotiations, it should be expected that there will be an escalation in rhetoric and tone from officials as the negotiations progress.
11. Concluding thoughts
Notwithstanding the US reaction, it was a fruitful first visit for Prime Minister Carney to the People's Republic of China. In a global trade landscape that is marked by unprecedented uncertainty, Canada has taken decisive action to strengthen diverse sources of unilateral and bilateral trade. Although the newly minted strategic partnership between Canada and China, which largely reorients previous trade irritants, is in its early stages, it signals a significant reset in collaboration between the two countries and opens up numerous business opportunities that have otherwise remained shut behind the doors of previously strained relations. For Canadian and Chinese businesses, this may be a pivotal moment to re-engage with two of the world's largest economies, diversify markets and attract new investment.
Dentons is uniquely positioned to assist with any Canadian-Chinese projects and business relations. All six of Dentons Canada's offices, situated in Canada's key economic centers, offer global expertise that is experienced in Canadian and Chinese cross-border issues. With our Dentons office in the Hong Kong Region, and our preferred partnership with the Beijing Dacheng 大成 Law Offices, Dentons provides legal advice and representation to governments and state-owned entities, financial institutions, multinational corporations, professional services firms and high net worth individuals in relation to their business needs in China and across the Asia-Pacific region.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Specific Questions relating to this article should be addressed directly to the author.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
