Thawing of Canadian-Chinese trade ties deepens rift with Washington

The Canadian government has dominated news cycles in recent weeks amid a noticeable shift in its approach toward the world’s two largest superpowers, China and the United States. Before drawing global attention with a rarely seen by Western leaders, forthright speech at the World Economic Forum (WEF) that appeared to challenge a more combative US administration, Prime Minister Mark Carney embarked on a landmark state visit to Beijing, where he signed a series of major trade agreements signalling a new strategic direction for Canada.

Canada’s balancing act between Washington and Beijing has changed dramatically since 2018, when an incident severely tested Ottawa’s loyalties. That year, Huawei chief financial officer Meng Wanzhou was detained by Canadian border agents during a stopover in Vancouver, acting on an FBI extradition request. The high-level official of China’s most successful technology firm was placed under house arrest in British Columbia and faced possible transfer to the United States over charges linked to Huawei’s dealings in Iran. The case dragged on until 2021, when US prosecutors dropped the charges, allowing Meng to return to China after three years.

Today, Canada once again finds itself navigating a transformed global landscape reminiscent of Donald Trump’s first presidency, when the Huawei affair unfolded. Ahead of his trip to Davos, Carney became the first Canadian prime minister in a decade to visit China. During the visit, Ottawa slashed tariffs on Chinese electric vehicles—from 100% to just 6%—a move laden with symbolism given China’s technological rise. In exchange, Beijing reduced tariffs on Canadian canola oil, a market worth roughly $4 billion, along with a range of other agricultural products. The two countries also agreed to introduce visa-free travel.

Most significantly, Carney has framed the deal as a boost for Canadian manufacturing, pointing to the prospect of “considerable” Chinese joint-venture investment in Canada. Unlike its southern neighbour, Canada lacks a domestic automobile industry, making foreign investment particularly attractive.

“We’re recalibrating Canada’s relationship with China, strategically, pragmatically, and decisively,” Carney wrote on X last week.

Though understated, the message marked a clear shift, according to an article published by UnHerd, namely that Canada was positioning itself as the first G7 economy to actively seize opportunities while managing risks in what Carney’s government sees as a post-Trump world.

Washington, however, has reacted with little enthusiasm to the thawing of those bilateral ties, though with a delay. More than a week after Ottawa and Beijing announced a new “strategic partnership,” the US president issued a warning via Truth Social.

“If Canada makes a deal with China, it will immediately be hit with a 100% Tariff against all Canadian goods and products coming into the USA,” Donald Trump wrote, without specifying which agreement he meant.

Davos speech opened new chapter in Canadian-US ties

Strains between the two neighbours have only intensified further following Carney’s speech in Davos, where he argued that the US-led world order had been “ruptured.” He urged other “middle powers” to band together against economic coercion by “greater powers,” warning that “if we’re not at the table, we’re on the menu.” Although Carney did not mention Trump by name, the remarks were widely interpreted as a critique of Washington’s recent policies.

Trump responded the following day, saying: “Canada lives because of the United States.” He also withdrew an invitation for Canada to join his newly formed Board of Peace for Gaza, which was formally launched at Davos with 20 participating countries, including Azerbaijan.

The US president continued his criticism on January 24, writing that if Carney “thinks he is going to make Canada a ‘Drop Off Port’ for China to send goods and products into the United States, he is sorely mistaken.”

Carney’s Davos address was widely viewed as a muscular response to Trump’s transactional approach to alliances and his push toward a hemispheric view of global order—an outlook seen as favourable in both Beijing and Moscow. It also comes after several months of intense trade negotiations with Washington after Trump unveiled a harsh tariff scheme against many countries, particularly Canada, whose largest trade partner is its southern neighbour.

“When we only negotiate bilaterally with a hegemon,” Carney declared, “we negotiate from weakness. We accept what’s offered. We compete with each other to be the most accommodating.” “This is not sovereignty,” he added, “it’s the performance of sovereignty while accepting subordination.”

While such rhetoric often remains symbolic, the article notes that in Carney’s case it has been paired with concrete action. Alongside the China agreement and his Davos appearance, the prime minister also finalized a strategic partnership with Qatar. Next on Ottawa’s agenda are free-trade negotiations with India, the Association of Southeast Asian Nations (ASEAN), and the South American trade bloc Mercosur.

“Who could have imagined that the world’s most polite, apologetic people would be the ones fomenting geopolitical upheaval?” the UnHerd paper concludes, nodding to the Canadians long-standing reputation for diplomatic restraint.

By Nazrin Sadigova