Canada Shifts Trade Strategy: A New Dawn with China Amidst US Relations

Sat Jan 17 2026 16:14:10 GMT+0200 (Eastern European Standard Time)

Prime Minister Mark Carney's recent agreement with China marks a pivotal shift in Canada's trade relations, aiming to diversify its economic partnerships amidst concerns over the US trade landscape.

In a strategic move signaling Canada's departure from strict reliance on the US, Prime Minister Mark Carney announced a landmark deal with China that reduces tariffs on Chinese electric vehicles, while China reciprocates with lowered tariffs on key Canadian agricultural exports. The deal is perceived as a response to ongoing uncertainties in US trade relations and aims to pave the way for a 'more predictable' economic framework between Canada and China.

Prime Minister Mark Carney's new approach to Canada's foreign policy can perhaps be distilled in one line: 'We take the world as it is, not as we wish it to be.'

That was his response when asked about the deal struck with China on Friday, despite concerns over its human rights record and nearly a year after he called China 'the biggest security threat' facing Canada.

The deal will see Canada ease tariffs on Chinese electric vehicles that it imposed in tandem with the US in 2024. In exchange, China will lower retaliatory tariffs on key Canadian agricultural products.

Experts told the BBC the move represents a significant shift in Canada's policy on China, one that is shaped by ongoing uncertainty with the US, its largest trade 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 DC based trade adviser and president of the Rideau Potomac Strategy Group.

Carney told reporters on Friday that 'the world has changed' in recent years, and the progress made with China sets Canada up 'well for the new world order'.

Canada's relationship with China, he added, had become 'more predictable' than its relationship with the US under the Trump administration.

In Canada, reactions to the deal were swift, characterized by mixed responses across the political spectrum. Some leaders expressed optimism, while others cautioned against potential negative impacts on the local economy, particularly within the automotive sector.

As the economic landscape evolves, this new trade framework could redefine the nature of Canada-China relations and reshape the competitive dynamics of North American trade.