The Canada-China trade relationship is shifting. Here's what small business importers need to know about tariffs, CARM, and supply chain risk in 2026.
If you're a Canadian small business owner importing goods from China, you've probably been watching the Canada-China trade deal news with a mix of curiosity and anxiety. The relationship between Canada and China is shifting — and those shifts have real, practical consequences for the products you source, the duties you pay, and the suppliers you rely on.
This guide cuts through the noise. Whether you've been importing from China for years or you're just getting started, here's what the evolving Canada-China trade landscape means for your bottom line in 2026.
Canada's trade relationship with China is one of the most complex and politically sensitive in the country's history. After years of tension — the Huawei/Meng Wanzhou affair, restrictions on Canadian canola exports, and the detention of the Two Michaels — the relationship began a cautious thaw under the Carney government in 2025 and into 2026.
Prime Minister Mark Carney, who came to power in April 2025, made economic diversification a cornerstone of his trade agenda. With US tariff threats looming, Canada began actively exploring deeper trade ties with alternative partners — including China, despite the geopolitical complications.
At the same time, Canada put in place several protective tariffs starting in late 2024:
China responded with its own trade investigation into Canadian canola and seafood. The result: a trade relationship that is simultaneously tense and strategically important — with both countries cautiously looking for ways to stabilize ties while protecting domestic industries.
If your imports fall outside the protected categories (EVs, steel, aluminum, solar), the core trade mechanics for most Canadian importers haven't dramatically changed. Standard MFN (Most Favoured Nation) tariff rates still apply to most consumer and industrial goods from China.
However, a few practical realities have shifted:
Currency and cost pressures: CAD/USD and CAD/CNY exchange rate swings in 2024–2025 created real cost volatility for Canadian importers. When pricing out orders from Chinese factories, factor in that exchange rates can move 5–10% within a production cycle.
Longer vetting timelines: Some Canadian importers report that Chinese factories are more cautious about new relationships given broader geopolitical uncertainty. Having a credible sourcing agent in China who can vouch for your legitimacy has become more valuable than ever.
Compliance scrutiny is up: The Canada Border Services Agency (CBSA) has been increasing examination rates on certain Chinese-origin goods. Make sure your shipments have correct HS codes, accurate declared values, and complete documentation — especially after CARM's full rollout.
Intellectual property protections: As trade tensions have been in the spotlight, IP enforcement conversations have picked up. If you're sourcing private label or custom-manufactured goods, make sure your supplier agreements clearly protect your designs and specifications.
One underappreciated shift in Canada's import landscape is the rollout of the CARM (CBSA Assessment and Revenue Management) system. As of 2025, Canadian importers are required to be registered in CARM and post their own financial security for duties and taxes.
This is a structural change — not directly related to the China trade deal, but it affects every importer sourcing from China. If you haven't set up your CARM account and posted security, you could face clearance delays or be blocked from importing entirely.
For small business importers, the practical steps are:
While a full free trade agreement between Canada and China remains a long-term possibility rather than an imminent reality, exploratory discussions have been ongoing. Here's what a more formal Canada China trade deal could theoretically mean for importers:
Lower duty rates: Many Chinese goods already enter Canada under low or zero MFN rates, but a formal FTA could eliminate remaining tariffs on certain categories and create more stable, predictable trade rules.
Stronger IP protections: A comprehensive trade agreement typically includes intellectual property chapters — good news for Canadian brands manufacturing custom products in China.
Rules of origin requirements: Any agreement would include rules about how much value must be added in China for goods to qualify for preferential rates. This could create complexity for products that use components from Taiwan, South Korea, or Vietnam.
Political risk: Any Canada-China trade deal would face significant political headwinds domestically and from Canada's US trading partners. The Carney government has to balance closer China engagement against CUSMA obligations and US sensitivities — particularly with the CUSMA review scheduled for July 2026.
The smartest move for Canadian small business importers right now isn't to bet on a particular trade outcome — it's to build flexibility into your supply chain so you can adapt regardless of what happens politically.
Here are five practical strategies:
1. Audit your HS codes. Many importers are on the wrong HS code for their products, meaning they may be paying more duty than necessary — or risking penalties for underpaying. Have a customs broker review your classification annually.
2. Diversify your supplier base. Don't be 100% dependent on a single Chinese factory. Even if you keep most of your volume in China, having a secondary supplier — whether in China, Vietnam, or elsewhere — reduces your risk if a trade event disrupts your primary source.
3. Know your landed cost inside out. With tariffs, freight rates, currency, and CBSA examinations all in flux, importers who track their landed cost precisely will be far better positioned than those who rely on rough estimates.
4. Build supplier relationships, not just transactions. Chinese suppliers who know and trust you are more likely to hold your pricing during volatile periods, prioritize your production timeline, and flag problems early.
5. Work with professionals who know Canadian trade law. A licensed customs broker, a sourcing agent on the ground in China, and a trade lawyer (for larger operations) are worth the investment in a complex regulatory environment.
The CUSMA review in July 2026 is a significant wildcard. Any Canada-China trade deal would need to be structured carefully to avoid triggering Article 32.10 of CUSMA, which gives the US and Mexico rights to review and potentially exit the agreement if Canada enters an FTA with a country designated a non-market economy — a label that would almost certainly apply to China.
This means the most likely near-term path is incremental: sector-by-sector agreements, a bilateral business council, and improved diplomatic channels rather than a comprehensive FTA. For most importers, the day-to-day mechanics of importing from China will look similar in 2026 to 2025 — with heightened attention to documentation, compliance, and risk management.
No. As of 2026, Canada and China do not have a formal free trade agreement. Trade between the two countries operates under standard WTO Most Favoured Nation terms, with additional surtaxes on EVs, steel, and aluminum.
The existing surtaxes on Chinese EVs (100%) and steel and aluminum (25%) remain in place. For most other manufactured goods, standard MFN rates apply. Future changes depend on the outcome of diplomatic negotiations and the CUSMA review in mid-2026.
Not necessarily — but diversifying your supplier base is always smart risk management. Many Canadian importers are pursuing a China+1 approach, maintaining primary production in China while developing a secondary supplier in Vietnam, India, or another country.
CARM is Canada's new digital system for managing trade compliance, import duties, and payments. All Canadian importers must be registered and post their own financial security. This affects all imports regardless of country of origin. Visit our CARM guide for Canadian importers for full details.
Vietnam is a strong complement — not a replacement — for China sourcing. Under CPTPP, Canadian importers can access preferential tariff rates on eligible goods from Vietnam, which can meaningfully reduce duty costs. See our full China vs Vietnam sourcing comparison for a detailed breakdown.
Navigating the Canada-China trade landscape takes expertise, relationships, and boots on the ground. Epic Sourcing Canada works directly with Canadian importers to source quality products from vetted factories in China and across Asia — handling supplier vetting, quality control, logistics coordination, and trade compliance support.
Whether you're placing your first order or optimising a supply chain you've been running for years, we can help you import smarter, reduce risk, and protect your margins in a changing trade environment.
