The agreement marks a significant breakthrough after a period of escalating trade tensions and reciprocal tariffs between the two nations. Xi Jinping hailed the development as a "turnaround" in the relationship. Carney's visit was the first by a Canadian leader to China in nearly a decade.

The impetus for this shift stems, in part, from Canada's desire to diversify its trade relationships beyond the United States, its largest trading partner. The uncertainty surrounding trade policies under the Trump administration, characterized by fluctuating tariffs, prompted Canada to seek alternative economic partnerships. This deal could also pave the way for increased Chinese investment in Canada, potentially impacting trade dynamics within North America.

The canola dispute, in particular, has been a contentious issue between China and Canada. China's initial imposition of high tariffs on Canadian canola oil raised concerns about trade barriers and protectionism. Canola is a significant Canadian export, and the reduced tariffs are expected to provide a boost to Canadian farmers and the agricultural sector.

The agreement also reflects China's growing interest in electric vehicles and its desire to expand its presence in the global automotive market. By securing most-favoured-nation status for its electric vehicles in Canada, China gains a competitive advantage in the Canadian market.

The easing of trade tensions between China and Canada comes at a time of heightened global trade uncertainty. The ongoing trade war between the United States and China has disrupted global supply chains and created economic headwinds for many countries. The agreement between China and Canada could be seen as a sign of increased cooperation and a move towards a more multilateral approach to trade.

Further details regarding the implementation of the tariff reductions and the scope of potential Chinese investments in Canada are expected to be released in the coming weeks. The long-term impact of this agreement on the broader geopolitical landscape remains to be seen.