(First published by Prima Markets, January 2026) Canadian Prime Minister Mark Carney travelled to Beijing to reset the troubled relationship between the two countries. Tensions have run high between Canada and China for approaching a decade, which in more recent years has throttled their trade relationship. The restart of relations brings a close to crippling trade barriers on Canadian canola exports to China, which left Canada without access to its most important canola trade partner and forces it to diversify into new markets.
Prime Minister Carney announced that by 1 March, China will lower canola seed tariffs to a combined rate of around 15%, down from the current combined rate of 84%. With the barrier significantly reduced, the renewed partnership aims to re-establish and grow canola trade flows.
“China used to be the biggest market for Canadian canola seed. We want to not just return to those levels but surpass them,” said Carney from Beijing this morning. “China is a $4bn canola seed market for Canadian producers, and this change [in tariffs] represents a significant drop from the current combined tariff levels of 84%.
Reigniting trade relations is the second of five pillars to the agreement, the first of which focuses on energy security and cooperation. In his speech, Carney focused on Canada’s oil and gas industry and China’s EV expertise, but canola is also part of the overall energy complex. It is not clear from the announcement what role canola trade had to play yet in the partnership’s energy cooperation, with emphasis for now on rebuilding trade flows. It is, however, clear that agriculture sits at the top of Canada’s priority list. “Our agricultural cooperation built the foundation of our bilateral relationship,” said Carney. “Canadians export more than 7bn dollars in agricultural products to China each year.”
The scale of the reversal in political tone between Canada and China cannot be overemphasised. Disputes between Canada and China extend back to 2018, following Canada’s arrest of Huawei executive Meng Wanzhou, and the ensuing political fallout. China retaliated with the arrest of Canadian businessman Michael Spavor and former diplomat Michael Kovrig on espionage charges.
Signs that the ice was beginning to clear came first at the end of October, when Chinese President Xi Jinping extended and invitation to Canadian Prime Minister Mark Carney to visit China following a short meeting at the sidelines of the Asia-Pacific Economic co-operation (APEC) summit. This was the first meeting between the Chinese president and a Canadian prime minister since 2017. Carney’s current visit to Beijing is the first in a decade.
Canada has since scrambled to diversify its markets to balance out the squeeze in potential export volumes, renegotiating a trade deal with Pakistan in November, which was a major importer of Canadian canola until 2022. Biosafety regulations introduced in Pakistan in 2022 locked out Canadian canola imports until the new trade earlier this month. Reports also emerged that Canadian producers could target nascent export markets, including Southeast Asia.
That raises new questions about how Canada could fulfil its new agreement to surpass former canola seed export levels. The Canadian government has, in recent months, developed policy incentives encouraging producers to establish partnerships in south and southeast Asia, which offer subsidies for diversifying Canada’s exports. That means Canada has effectively encouraged producers away from the Chinese market just as the door reopens.