In a move that signals a strategic shift in Canada’s foreign policy, Prime Minister Mark Carney has announced a trade deal with China that eases tariffs on Chinese electric vehicles (EVs) in exchange for lower retaliatory tariffs on key Canadian agricultural products. This deal comes despite concerns over China’s human rights record and Carney’s own past description of China as “the biggest security threat” facing Canada.
Experts say the deal represents a significant change in Canada’s approach to China, shaped by ongoing uncertainty in its relationship with the United States, its largest trading partner. “The prime minister is saying, essentially, that Canada has agency too, and that it’s not going to just sit and wait for the United States,” said Eric Miller, a Washington-based trade adviser and president of the Rideau Potomac Strategy Group.
Carney has acknowledged that “the world has changed” in recent years, and the progress made with China sets Canada up “well for the new world order”. He described Canada’s relationship with China as “more predictable” than its relationship with the US under the Trump administration, adding that Canada is “recalibrating” its relationship with China, “strategically, pragmatically, and decisively”.
The deal has received a mixed reaction in Canada. While Saskatchewan Premier Scott Moe welcomed it as “very good news” for farmers hit by China’s retaliatory tariffs, Ontario Premier Doug Ford, whose province is home to Canada’s auto sector, was sharply critical, saying removing EV tariffs on China “would hurt our economy and lead to job losses”.
Experts say the electric vehicle provisions in the trade deal could help China make inroads into the Canadian automobile market, potentially putting pressure on US-based EV makers like Tesla that are seeking to expand their market share in Canada. Carney has signalled to the Trump administration that Canada is warming up to China, according to Vivek Astvansh, a business professor at McGill University in Montreal.
The reaction from the White House has been mixed, with US trade representative Jamieson Greer calling the deal “problematic”, while President Donald Trump hailed it as “a good thing”. Trump has previously imposed tariffs on Canadian sectors like metals and automotive, leading to economic uncertainty, and has threatened to rip up the North American free trade agreement (USMCA), which is now under mandatory review.
For Carney, the deal with China may be the first step in a “recalibration” of Canada’s trade relationships, as the future of North American free trade remains unclear. “There’s a reasonable chance that we could end up in 2026 without a meaningful, workable trade deal with the United States,” said Miller, “and Canada needs to be prepared.”
