Canada Shuts Down Free Trade Ambitions With China, Says Carney

Canada’s prime minister, Mark Carney, has made it clear that Ottawa is not seeking a free trade agreement with China, pushing back against claims triggered by threats from Donald Trump.

Speaking on Sunday, Carney said a recently announced arrangement with Beijing should not be confused with a full trade pact. Instead, he described it as a limited step aimed at easing tariffs in a small number of industries that had been targeted in recent years.

Trump had warned that the United States could impose sweeping 100% tariffs on Canadian exports if Canada pursued a broader trade deal with China. The former president accused Canada of potentially acting as a gateway for Chinese goods into the US market.

Carney emphasized that Canada remains bound by its obligations under the United States-Mexico-Canada Agreement, which restricts member countries from entering free trade agreements with so-called non-market economies without prior consultation.

“We are not planning any such agreement with China or with any other non-market economy,” Carney said, adding that the recent talks with Beijing were focused on correcting trade disputes that had escalated over the past two years.

Trade tensions between the two countries intensified in 2024 when Canada imposed a 100% tariff on Chinese electric vehicles, along with 25% duties on steel and aluminum, mirroring similar measures taken by the United States. China retaliated by slapping heavy tariffs on Canadian agricultural exports, including canola products, pork, and seafood.

Earlier this month, however, Canada adjusted its stance. During a diplomatic visit to China, Carney agreed to lower tariffs on Chinese electric vehicles in exchange for reduced Chinese duties on Canadian farm products. Under the new framework, imports of Chinese EVs will be capped at 49,000 vehicles annually at a tariff rate of 6.1%, with that limit gradually rising to about 70,000 over five years.

Carney noted that these vehicles would still make up only a small fraction—roughly 3%—of Canada’s annual vehicle sales, and said China is expected to begin investing in Canada’s automotive sector within three years as part of the arrangement.

Trump reacted sharply on social media, claiming Canada was attempting to serve as a “drop-off point” for Chinese exports headed to the United States. He insisted that such a move would not be tolerated.

US Treasury Secretary Scott Bessent echoed those concerns, warning that Canada must not become a backdoor for low-cost Chinese goods entering the American market. He also questioned Carney’s motivations, suggesting the prime minister was courting approval from global elites ahead of upcoming trade renegotiations.

The dispute comes amid broader diplomatic friction between Washington and Ottawa, including Trump’s controversial rhetoric about absorbing Canada as a US state and his renewed push to acquire Greenland—moves that have unsettled NATO allies.

Carney, meanwhile, has positioned himself as a leading voice among mid-sized nations advocating for cooperation in the face of growing pressure from major powers. Speaking at the World Economic Forum in Davos, he warned that countries unable to assert themselves risk being sidelined, a speech that drew widespread attention and praise.

Trump later intensified the rhetoric by sharing a digitally altered map depicting Canada, Greenland, and several other territories as part of the United States, further fueling tensions between the two leaders.