Prime Minister Mark Carney’s deal with China marks a clear shift in Canada’s foreign policy, signalling a move away from reliance on the United States amid growing trade uncertainty.
Responding to questions about the agreement struck despite China’s human rights record and a year after he labelled Beijing Canada’s “biggest security threat”, Carney said: “We take the world as it is, not as we wish it to be.”
Under the deal, Canada will ease tariffs on Chinese electric vehicles imposed alongside the US in 2024, while China will reduce retaliatory tariffs on key Canadian agricultural exports, reports Reuters.
Canada will initially allow in up to 49,000 Chinese electric vehicles at a tariff of 6.1% on most-favoured-nation terms, Carney said after talks with Chinese leaders, including President Xi Jinping.
That compares with the 100% tariff on Chinese electric vehicles imposed under former Prime Minister Justin Trudeau in 2024, following similar U.S. penalties. In 2023, China exported 41,678 EVs to Canada.
Experts say the move reflects Ottawa’s attempt to diversify trade relationships as ties with Washington become less predictable.
“The prime minister is saying that Canada has agency and won’t simply wait on the United States,” said Eric Miller, president of the Rideau Potomac Strategy Group.
Carney said Canada’s relationship with China had become “more predictable” than its relationship with the US under President Donald Trump, adding that the agreement positions Canada well for a changing global order. In a social media post, he described the move as a strategic and pragmatic “recalibration” of ties with Beijing.
The agreement comes as Trump has imposed tariffs on Canadian metals and automobiles and threatened to dismantle the USMCA trade pact, which is currently under mandatory review.
“There’s a reasonable chance Canada could be without a workable trade deal with the United States after 2026,” Miller said. “Canada needs to be prepared.”
Reaction in Washington was mixed. US Trade Representative Jamieson Greer called the deal “problematic,” while Trump said securing an agreement with China was “a good thing.”
For Carney, the China deal appears to be an early step in reshaping Canada’s trade and foreign policy amid uncertainty over the future of North American free trade.
Four things US wanted from Canada on trade
With US–Canada trade negotiations still stalled, the United States has laid out four major demands it says must be addressed for the USMCA free trade agreement to remain in place, reports BBC.
At the top of the list is greater access to Canada’s dairy market, which operates under a supply-management system that tightly controls production and imports to protect domestic farmers. Washington argues this system unfairly limits US dairy exports.
The US is also pushing Canada to revise legislation governing online streaming and digital news, which requires foreign platforms such as Netflix, Spotify, Google and Meta to support Canadian content and news outlets.
American officials say these laws discriminate against US tech and media companies.
Another demand is the reinstatement of US liquor sales in Canadian provinces that removed American alcohol from store shelves in retaliation for US tariffs on Canadian goods. US producers say the boycott has significantly affected their sales.
Finally, Washington wants Canada to resolve a cross-border electricity dispute, accusing Alberta’s power grid operator of restricting access for electricity producers in the US state of Montana, an allegation the provincial government denies.
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