Canada Rules Out Free Trade Pact with China as Tariffs Loom
Canada Rules Out Free Trade Pact with China as Tariffs Loom
Canada rejects a free trade deal with China amid Trump tariff threats, reaffirming CUSMA commitments and prioritizing tariff dispute resolution.
Canada's prime minister, Mark Carney, stated on Sunday that Ottawa has no intention of pursuing a free trade agreement with China, even as U.S. President Donald Trump threatens to impose 100% tariffs on Canadian goods should such a pact go forward. He emphasized that Canada remains committed to the CUSMA framework, which prescribes notifications before pursuing trade deals with non-market economies. "We have no intention of doing that with China or any other non-market economy," Carney said, highlighting that recent talks with Beijing have focused on tariff disputes rather than broader pacts.
Carney also underscored that the goal of Canada’s current engagement with China is to resolve specific tariff issues that have lingered for years, not to open the door to a sweeping free trade agreement. He pointed to past steps under the U.S.-led framework where Canada mirrored certain U.S. tariffs in 2024, including a 100% levy on Chinese electric vehicles and 25% tariffs on steel and aluminum, all in response to Beijing’s own measures. China retaliated with 100% import taxes on Canadian canola oil and meal and 25% on pork and seafood.
In a major recent turn, Carney announced that a visit to China this month brought a change in approach toward electric vehicles. Canada cut its 100% tariff on Chinese EVs in exchange for lower tariffs on selected Canadian products. The agreement includes an initial annual cap of 49,000 Chinese EVs entering Canada at a tariff rate of 6.1%, with potential growth to about 70,000 over five years. There was no cap on Chinese auto imports before 2024, and officials say the arrangement is designed to support Canada’s auto industry while maintaining tariff discipline.
Trump has publicly claimed that China is overtaking Canada, adding to the noise around the tariff dispute, while Carney reiterates that Canada will not be drawn into a free trade deal with Beijing or any other non-market economy without proper notice. The net message from Ottawa is clear: protect existing commitments, pursue pragmatic tariff resolutions, and avoid broad new FTAs that could trigger higher protectionist backlash.
Overall, Ottawa’s stance remains cautious but stable: no FTA with China for now, and a focus on managing tariff issues within the current framework and the U.S.-Canada-Mexico context.
