A day after US President Donald Trump issued a sharp warning threatening steep tariffs on Canada, Prime Minister Mark Carney made it clear that Ottawa has no intention of pursuing a free trade agreement with China, pushing back against suggestions that his government is drifting closer to Beijing.
Carney’s remarks followed Trump’s threat to impose 100 per cent tariffs on Canadian goods if Canada went ahead with a free trade deal with China. Seeking to reassure both domestic and international audiences, the Canadian prime minister stressed that recent contacts with Beijing were narrowly focused on resolving specific tariff-related disputes rather than expanding broader trade ties.
Carney said Canada remains bound by its obligations under the Canada–United States–Mexico Agreement (CUSMA), which requires prior notification before entering into free trade agreements with non-market economies. He underlined that Ottawa has no plans to pursue such agreements with China or any other non-market economy, adding that recent discussions with Beijing were aimed solely at correcting trade issues that had emerged over the past few years.
According to Carney, the understanding reached with China was designed to address retaliatory tariffs imposed during a period of heightened trade tensions, not to open the door to unrestricted market access or a comprehensive trade pact. He emphasised that Canada continues to respect the framework of its existing trade agreements with the United States and Mexico.
Trump’s warning came in a series of social media posts in which he accused China of undermining Canada’s economy and cautioned Ottawa against becoming a channel for Chinese goods entering the US market. He suggested that deeper trade ties with Beijing would have severe consequences for Canada, including the imposition of punitive tariffs.
After his initial outburst, Trump’s rhetoric toward Canada appeared to soften slightly, with his subsequent comments focusing more directly on criticism of China. Even so, he continued to argue that Canada risked damaging its economy by engaging with Beijing and claimed that Canadian businesses were shifting operations to the United States.
Canada’s position follows a period of tit-for-tat trade measures between Ottawa and Beijing. In 2024, Canada imposed steep tariffs on Chinese electric vehicles, steel and aluminium, mirroring similar moves by Washington. China responded by slapping duties on Canadian exports such as canola oil, pork and seafood.
Earlier this month, Canada adjusted some of those measures during a visit to China, agreeing to reduce its tariff on Chinese electric vehicles in exchange for lower Chinese duties on Canadian agricultural products. Carney said the move was intended to stabilise trade flows rather than signal a broader shift in policy.
He outlined a capped system for Chinese electric vehicles, allowing a limited number to enter the Canadian market at a reduced tariff, with gradual increases over several years. Carney noted that the cap represents only a small share of Canada’s overall vehicle market and said China is expected to begin investing in Canada’s auto sector within a few years.
US officials have expressed concern that Canada could become a gateway for Chinese goods into the American market. Treasury Secretary Scott Bessent warned that Washington would not allow Canada to serve as an entry point for what he described as cheap Chinese imports, especially as the US–Mexico–Canada Agreement is due for renegotiation.
The trade dispute has unfolded alongside broader tensions between Trump and Carney on global issues. As US pressure on allies has increased, including controversial positions on Greenland and Nato, Carney has sought to position Canada as a leading voice among middle powers working together to counter coercion by larger states.
Speaking at the World Economic Forum in Davos, Carney argued that middle powers must cooperate closely in an increasingly uncertain global environment, warning that countries excluded from decision-making risk having outcomes imposed upon them.
