A Fork in the Road: What the new China trade deal could mean for Canada’s economy

Canada is facing a less stable world. Trade disputes are growing, supply chains are shaky, and the last year has shown that putting all our trust in one partner can leave us vulnerable.

In response, Prime Minister Mark Carney has announced a new trade deal with China that could affect what Canadians drive, and how Canada builds its economy.

The federal government will now allow up to 49,000 electric vehicles (EVs) made in China to be sold in Canada each year at a much lower tariff. 

Instead of the previous 100% tariff, these cars will face a 6.1% tariff. 

In return, China plans to lower tariffs on Canadian canola seed. It will also get rid of all tariffs on lobsters, crabs, and peas, in a move that is expected to bring relief to Atlantic Canadian fishermen.

At first glance, this may not seem like a big deal. Canada bought nearly 1.9 million new vehicles in 2025, so Chinese EVs would still make up less than 3% of the market. 

But the bigger concern for some is about jobs. Many Canadian workers depend on auto jobs that are closely tied to U.S. car companies. Some worry that allowing more Chinese-made EVs could put those jobs at risk.

At the same time, Prime Minister Carney says the deal is expected to bring new Chinese investment into Canada’s auto sector within the next three years. 

That investment could help protect existing auto jobs and create new manufacturing careers for Canadian workers, at a time when the industry is already under pressure as President Trump continues to threaten Canada’s economy.

In that context, some believe Canada has more to gain than to lose by bringing in new partners, creating new EV jobs, and relying less on one country.

Taken together, this move points to a bigger choice Canada is facing: The world is moving toward electrification faster than many expected. 

For example, in China, even large diesel trucks are quickly being replaced with electric ones. These trucks create far less climate pollution, and are cheaper to run. 

As more countries like China switch to electric vehicles, the global demand for fossil fuels is starting to drop.

That matters for Canada. While oil and gas only accounts for 3.1% of Canada’s GDP, most Canadians believe that exporting fossil fuels is important for jobs and revenue.

But as the world needs less diesel and gas, a big question remains: what happens if Canada keeps betting on fossil fuel exports in a world that is rapidly electrifying?

Canada now faces a fork in the road. One path keeps us tied to fossil fuels and gas-powered cars that are getting more expensive. 

The other path opens us up to a cleaner and more affordable future built around clean energy and diverse global trade agreements.

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