Ottawa: A day after US President Donald Trump issued a fierce warning over potential tariffs, Canadian Prime Minister Mark Carney on Sunday made it clear that Ottawa has no intention of pursuing a free trade agreement with China, firmly pushing back against claims that his government is drifting closer to Beijing.
Carney’s statement came in response to Trump’s remarks threatening to impose tariffs as high as 100 per cent on Canadian goods if Canada were to deepen trade ties with China. The Canadian prime minister stressed that recent engagement with Beijing was narrowly focused on resolving specific tariff disputes and did not signal any broader shift in trade alignment.
“We have commitments under CUSMA not to pursue free trade agreements with non-market economies without prior notification. We have no intention of doing that with China or any other non-market economy,” Carney said, referring to the Canada–United States–Mexico Agreement. “What we have done with China is to rectify some issues that developed in the last couple of years.”
Trump’s tariff warning and Ottawa’s response
The warning from Trump came on Saturday through a series of social media posts, in which he accused Canada of risking its economy by engaging with China. He claimed that a deeper trade relationship with Beijing would harm Canadian businesses and warned that Ottawa could face severe economic consequences from Washington.
Trump’s comments included threats of punitive tariffs on Canadian exports to the US, Canada’s largest trading partner. He also alleged that Canada could become a conduit for Chinese goods entering the American market, undermining US manufacturing and trade policy.
Carney sought to reassure both domestic and international audiences that Canada remains bound by its existing trade commitments. He emphasised that the CUSMA framework includes provisions requiring member countries to notify partners before entering trade agreements with non-market economies.
According to the Canadian prime minister, the limited understanding reached with China was aimed at de-escalating retaliatory tariffs imposed over the past two years and did not amount to opening Canadian markets to unrestricted Chinese imports.
Shifting tone from Washington
While Trump’s initial rhetoric towards Ottawa was combative, his tone appeared to soften slightly in subsequent posts, with a sharper focus directed at Beijing instead. However, he continued to criticise Canada’s engagement with China, describing it as a strategic mistake.
In one post, Trump wrote that China was “successfully and completely taking over” Canada, a claim strongly rejected by Canadian officials. In another message, he said he wanted to see Canada “survive and thrive,” even as he repeated his opposition to any deal involving Beijing.
Senior members of the Trump administration echoed these concerns. US Treasury Secretary Scott Bessent warned that Washington could not allow Canada to become an entry point for Chinese goods into the US market, particularly ahead of the planned renegotiation of CUSMA later this year.
Canada–China tariff adjustments explained
Canada’s clarification comes against the backdrop of escalating trade tensions between Ottawa and Beijing. In 2024, Canada imposed a 100 per cent tariff on Chinese electric vehicles and 25 per cent tariffs on steel and aluminium, mirroring similar measures adopted by the US.
China responded with retaliatory duties on several Canadian exports, including canola oil, pork and seafood, hitting key agricultural sectors. The tit-for-tat measures prompted months of negotiations aimed at stabilising trade relations.
Earlier this month, during a Canadian delegation’s visit to China, Ottawa agreed to modify its stance by reducing the 100 per cent tariff on Chinese electric vehicles. In return, Beijing eased tariffs on selected Canadian agricultural products.
Carney explained that the revised framework includes a capped import system for Chinese EVs. Under the plan, an initial annual quota of 49,000 vehicles would be allowed to enter Canada at a 6.1 per cent tariff, rising gradually to around 70,000 vehicles over five years. He noted that this represents roughly 3 per cent of Canada’s annual vehicle sales.
The prime minister added that China is expected to begin investing in Canada’s automotive sector within three years, a move Ottawa believes could support domestic manufacturing rather than undermine it.
Wider geopolitical tensions
The trade dispute unfolds amid broader diplomatic friction between Trump and Carney. Relations have also been strained by US pressure on allies over issues ranging from defence spending to Washington’s controversial interest in acquiring Greenland.
Carney has positioned Canada as part of a group of so-called middle powers seeking to balance relations between major global players. Speaking at the World Economic Forum in Davos, he argued that cooperation among such countries is essential in an increasingly coercive global environment.
“Middle powers must act together because if you are not at the table, you are on the menu,” Carney said, a remark widely interpreted as a veiled reference to US and Chinese pressure on smaller economies.
Trump, meanwhile, has continued to needle Canada over its sovereignty, at times suggesting that the country could be absorbed into the US, comments that have drawn sharp criticism north of the border.
Conclusion
By ruling out a free trade agreement with China, Canada has sought to draw a clear line amid intensifying pressure from Washington. While Ottawa continues to adjust tariffs to stabilise trade and protect domestic industries, Carney has underlined that Canada’s core trade commitments remain firmly anchored in CUSMA. As tariff threats and geopolitical tensions mount, Canada now faces the challenge of balancing economic pragmatism with the realities of an increasingly polarised global trade environment.