Trump’s USMCA exit threat seen pushing Canada into China’s arms ‘as a hedge’

Analysts suggest the US and Canada are diverging on China policy after Canadian Prime Minister Mark Carney announced a deal with Beijing. This follows a period of increased alignment between Washington and Ottawa on issues like electric vehicle tariffs and investment screening. The new agreement between Canada and China includes trade concessions, restored communication channels, and new dialogues on finance and energy. Carney described China as a more "predictable" partner than the US and signaled a "new strategic partnership" during his visit to Beijing, the first by a Canadian prime minister since 2017. This signals Canada's willingness to engage with China, even if it contradicts US interests.

Amidst a changing global landscape and perceived unreliability of the U.S., Canada is re-evaluating its international relations, particularly with China. Prime Minister Mark Carney's recent visit to Beijing, the first by a Canadian prime minister in eight years, signals a potential shift. This follows a meeting between Carney and President Xi Jinping in October. Canada is exploring a strategy of "selective engagement" with China, focusing on areas of mutual benefit. While overall favorability towards China remains low in Canada, there is growing support for strengthening economic ties as the U.S. is viewed as an increasingly unpredictable partner. This approach aims for a more predictable and effective relationship between Canada and China.

In January 2026, Canadian Prime Minister Mark Carney visited China to improve relations after years of tension. Carney met with Chinese President Xi Jinping, who expressed willingness to enhance ties following initial talks in South Korea in October 2025. Carney, the first Canadian prime minister to visit China in eight years, emphasized the need for a "strategic partnership" focusing on agriculture, energy, and finance to address global challenges. The effort to improve relations is partly motivated by the economic impact of US tariffs under President Donald Trump. While no announcements were made regarding tariffs between China and Canada, the leaders signaled a desire to strengthen cooperation amidst global trade disruptions.

Canadian Prime Minister Mark Carney is visiting China, marking the first such trip since 2017, to reset strained relations and explore economic opportunities beyond the US. The visit, described as "consequential and historic," aims to diversify Canada's trade amid uncertainty with its US trade future. Carney will meet with Premier Li Qiang, Chairman Zhao Leji, and President Xi Jinping to discuss trade, agriculture, and international security. The visit follows a period of strained relations stemming from the 2018 arrest of Huawei executive Meng Wanzhou in Canada and subsequent espionage charges against two Canadians in China, all of whom were released in 2021. Despite past tensions and concerns over China's disregard for international norms, Canada recognizes the need for cooperation given China's global influence.

Canadian Prime Minister Mark Carney visited Beijing to establish a "new strategic partnership" with China, marking the first visit by a Canadian leader in eight years. Carney and President Xi Jinping discussed reducing tariffs and increasing cooperation in agriculture, energy, and finance. A preliminary trade deal was reached, including preferential tariffs for electric vehicle imports from China. The visit aims to reset strained relations following previous diplomatic disputes and reduce Canada's economic reliance on the US after increased tariffs. Agreements were also signed to cooperate on clean energy, fossil fuels, forestry, culture, and tourism, with the goal of increasing Canadian exports to China. Xi Jinping stated that relations between the two countries have reached a turning point.

US President Donald Trump stated that Canada pursuing a trade deal with China involving reduced tariffs on Chinese electric vehicles is a "good thing," despite concerns raised by his own trade representative. The agreement allows Canada to import up to 49,000 Chinese EVs at a preferential tariff rate of 6.1 percent. US Trade Representative Jamieson Greer called the deal "problematic," citing concerns about protecting American auto workers and the potential impact on trilateral trade negotiations with the US and Mexico. Greer's comments contrast with Trump's support and deviate from previous US policy that encouraged Canada to align with Washington's higher tariffs on Chinese EVs. The deal and differing reactions highlight a divergence in trade perspectives between the US and Canada regarding China.

In January 2026, the US government, under President Donald Trump, criticized Canada's decision to allow up to 49,000 Chinese electric vehicles (EVs) into its market at a reduced tariff rate. Canadian Prime Minister Mark Carney's deal in Beijing lowered the tariff from 100 percent to 6.1 percent. US officials, including Transportation Secretary Sean Duffy, expressed concerns that Canada would regret the decision, fearing it would give China a stronger foothold in North America. While US Trade Representative Jamieson Greer stated the limited number of vehicles wouldn't impact US auto exports to Canada, he called the decision "problematic" due to existing US tariffs designed to protect American auto workers from Chinese competition.

Canada and China have agreed to ease trade tensions by removing recently imposed tariffs on key imports. The agreement, reached during Canadian Prime Minister Mark Carney's visit to Beijing, involves Canada removing its 100% tariff on Chinese electric vehicles (EVs) implemented in 2024. In return, China will lower tariffs on Canadian canola. Instead of high tariffs, Canada will implement a quota of 49,000 EV imports annually, subject to a preferential tariff rate of 6.1%. The goal is to foster partnerships, attract Chinese investment in Canada's auto sector, and lower EV costs for Canadians while protecting Canada's developing EV industry. The quota roughly corresponds to pre-tariff EV import levels.

Canada and China have reached a deal to ease tariffs, signaling a potential shift in Canada's foreign policy away from the United States. Canada will reduce tariffs on Chinese electric vehicles, while China will lower retaliatory tariffs on Canadian agricultural products. Prime Minister Carney stated that Canada is "recalibrating" its relationship with China due to the changing global landscape and the perceived unpredictability of trade relations with the U.S. The agreement has been praised by some, like Saskatchewan's Premier, who anticipate relief for farmers, but criticized by others, such as Ontario's Premier, who fear job losses in the auto sector due to increased Chinese EV imports. Experts suggest the move reflects Canada's desire for greater agency in its trade relationships.

In January 2026, Canada announced a divergence from US trade policy regarding China. Prime Minister Mark Carney stated that Canada will eliminate its 100% tariff on Chinese electric vehicles. This decision was made following discussions in Beijing, where Canada sought to reset its relationship with China. In exchange for the tariff reduction on electric vehicles, Canada anticipates lower Chinese duties on Canadian farm exports. The move signals a shift in Ottawa's approach to trade with China, independent of the US. The agreement aims to benefit Canadian agricultural producers through improved access to the Chinese market.

Canadian Prime Minister Mark Carney is visiting Beijing this week, marking the first such visit in nearly a decade. The trip aims to repair strained relations with China amid shifting global alliances and trade challenges with the United States. Canada seeks to diversify its export markets to offset economic pressures from its southern neighbor. Despite diplomatic efforts, the relationship remains complex, underscored by past detentions of Canadians in China following the arrest of Meng Wanzhou. Carney's visit is framed as an attempt to establish a "stable" relationship with China, despite awareness of the challenges posed by its leadership.