Canada has made it clear: there are no plans to sign a free trade agreement with China, even as U.S. President Donald Trump threatens steep tariffs on Canadian goods if Ottawa does so. Prime Minister Mark Carney and Canada’s leaders are standing firm, but the tensions highlight rising trade pressure between allies.
Carney told reporters that Canada respects existing trade rules under the Canada-U.S.-Mexico Agreement (CUSMA), which require any country to notify the others before pursuing a trade deal with a “non-market economy” like China. He said the recent adjustments made with China were meant to fix specific issues, not create a full free trade pact.
Trump, however, has publicly criticized the idea of stronger Canada–China trade ties. On social media, he claimed China was “taking over” Canada and warned that the U.S. could slap 100 percent tariffs on all Canadian goods if Ottawa “makes a deal with China.” His comments did not define what kind of pact he meant.
At the centre of the talk is a smaller agreement reached late last year that lowered tariffs on Chinese electric vehicles (EVs) entering Canada and eased trade in agriculture and fish products. Trump initially seemed fine with this deal, calling it positive for Canada. But he later reignited concerns about broader trade with China.
U.S. Treasury Secretary Scott Bessent added clarity, saying tariffs could apply if Canada allows Chinese goods to be sold in the U.S. through Canada, a concern known as “dumping.”
Economists say Trump’s shift reflects his desire to maintain leverage over Canada’s trade options. Professor Moshe Lander explained that limiting Canada’s choices helps the U.S. keep more control in upcoming trade discussions, especially as CUSMA is reviewed and updated.
Canada’s Foreign Affairs Minister Anita Anand stressed that Ottawa will still work to diversify trade, including with India and other partners, to “not put all our eggs in one basket.” She said diversifying trade isn’t the same as making a free trade deal with China, and Canada will continue to protect its own economic interests.
While tensions with the United States persist, Carney’s government is trying to walk a careful line: honour current trade rules, push for broader global ties, and avoid provoking tariff actions that could hurt Canadian businesses.
