Chinese leader Xi Jinping and Canadian Prime Minister Mark Carney announced tariff cuts and signaled a reset in relations after important talks in Beijing.

Carney told reporters that China will reduce taxes on Canadian canola oil from 85% to 15% by March 1, but Ottawa has agreed to tax Chinese electric vehicles at the most-favored-nation rate of 6.1%.

The agreement is a milestone after years of tension and retaliatory taxation. Mr. Xi praised the “improvement” in relations between the two countries, but it was also a victory for Mr. Carney, the first Canadian leader to visit China in nearly a decade.

He is seeking to diversify Canadian trade away from the United States, its largest trading partner, in the wake of uncertainty caused by President Trump’s intermittent tariffs.

The deal could also increase Chinese investment in Canada, which is in close proximity to the United States.

Carney himself seemed to allude to the fact that this was a result of President Trump’s tariffs, which drove one of America’s key allies into its biggest rival.

He told reporters that relations between Canada and China have become more “predictable” in recent months and said he felt discussions with China were “realistic and respectful.”

He also made clear that Ottawa doesn’t agree with Beijing on everything, adding that discussions with Mr. Xi have clarified Canada’s “red lines not to be crossed,” including human rights, concerns about election interference and the need for “guardrails.”

Asked about China’s human rights record, he said: “We take the world as it is, not as we would like it to be.”

Officials believe Carney’s visit could serve as an example for countries around the world that are also feeling the pain of Washington’s tariffs.

Mr. Xi, by contrast, wants to show China as a stable global partner and wants a more pragmatic relationship, one that is, in Beijing’s words, a “win-win for all.”

And it seems to be working. The South Korean president and the Irish prime minister have both visited Beijing in recent weeks. The British Prime Minister is due to visit soon, as is the German Chancellor.

“The world has changed dramatically,” Carney said, adding that how Canada positions itself “will shape our future for decades to come.”

At the beginning of his three-day visit, he said Canada and China’s partnership will bring a “new world order” to both countries. He later added that the multilateral system had been “eroded, or weakened, to put it politely.”

“The healthy and stable development of China-Canada relations will lead to world peace, stability, development and prosperity,” Xi said as Chinese and Canadian delegations sat in the Great Hall of the People on Friday.

Tariffs have become an important point of conflict between the two countries.

Following similar regulations in the United States, Canada has imposed 100% tariffs on Chinese electric vehicles in 2024.

Last year, the Chinese government imposed retaliatory tariffs on more than $2 billion (1.5 billion pounds) of Canadian agricultural products and food products such as canola seed and oil. As a result, China’s imports of Canadian products decreased by 10% in 2025.

Under the agreement reached on Friday, Canada will only allow 49,000 Chinese-made electric vehicles to enter the Canadian market at a tariff rate of 6.1 per cent.

The cap is in response to Canadian automakers’ concerns about the influx of affordable Chinese-made EVs.

In addition to providing relief to canola producers, tariffs on Canadian lobster, crab, and peas will also be reduced.

China is Canada’s second-largest trading partner, but it still lags behind the United States in terms of trade volume.

Economic relations with China are becoming increasingly important to Mr. Carney. Arriving in Beijing on Wednesday, he met with executives from prominent Chinese companies, including electric car battery makers and energy giants.

On Thursday, the two countries signed several agreements on energy and trade cooperation.

Colin Robertson, a former Canadian diplomat and deputy director of the Canadian Institute of International Affairs, said the trip was a “reset of relations” that may be “modest in ambition” but “more realistic in terms of what we can reasonably get.”

The last Canadian prime minister to visit China was Justin Trudeau, who met with President Xi in Beijing in 2017.

The visit came before relations soured after Canada arrested Meng Wanzhou, chief financial officer of Chinese tech giant Huawei, in 2018 at the request of the United States.

Days later, China detained Canadian citizens Michael Kovrig and Michael Spavor on espionage charges, a move that critics saw as retaliation for Meng’s arrest, a charge China denies.

Meng and Michael were released in 2021.

Ahead of the Carney-Xi meeting, Michael Kovrig wrote in X magazine that the visit should not only be aimed at strengthening ties, but also “influence management.”

Kovrig described Chinese negotiators as “very skillful, very calculating, always looking for influence.”

“That’s why engagement must be handled with discipline,” he wrote, adding that Carney should also advocate for Canadians imprisoned in China. According to Canadian media, the number is about 100.

Carney told reporters that Ottawa will take a “narrower, more specific” approach to countries that don’t share the same values.

“We are very clear where we cooperate and where we differ,” he said, adding that China’s claims against imprisoned pro-democracy activist Jimmy Lai in Taiwan and Hong Kong came up in “extensive discussions.”

Canada and China have “different systems” that limit the scope for cooperation, he said.

“But to build effective relationships, we have face-to-face conversations. We don’t hold megaphones and have conversations like that.”