Canada Rules Out Free Trade Deal With China Amid US Tariff Threats

Canada has no plans to pursue a free trade agreement with China, Prime Minister Mark Carney said, rejecting claims that recent moves signaled a broader trade realignment. His comments came after former US president Donald Trump threatened to impose 100% tariffs on Canadian imports if Ottawa moved closer to Beijing.
Carney clarified that Canada’s recent agreement with China was limited in scope and focused only on easing tariffs in a few sectors that had been hit by retaliatory measures. He stressed that Canada remains bound by commitments under its trade agreement with the US and Mexico, which restricts free trade deals with non-market economies without prior notification.
Canada had imposed steep tariffs on Chinese electric vehicles, steel, and aluminium in 2024, mirroring US policy. China responded with heavy duties on Canadian agricultural and food exports. Earlier this month, Canada partially rolled back tariffs on Chinese electric vehicles in exchange for reduced Chinese duties on Canadian goods, alongside strict annual import caps.
Under the revised arrangement, Chinese electric vehicle imports into Canada will be capped initially at 49,000 units annually at a reduced tariff rate, rising gradually over five years. In return, China is expected to begin investing in Canada’s automotive sector within three years.
US officials warned against Canada becoming a gateway for Chinese goods into the American market, with Trump accusing Ottawa of undermining US trade interests. The dispute comes amid broader diplomatic tensions between the two countries and growing concerns over global trade realignments.
Carney has positioned Canada as part of a broader coalition of mid-sized economies seeking to reduce dependence on major powers and protect economic sovereignty in an increasingly fragmented global trade environment.