Carney Dismisses China Trade Pact as Trump Threatens Steep Tariffs

Canadian Jan 26 : Prime Minister Mark Carney has said Ottawa has no plans to negotiate a free-trade agreement with China, responding to warnings from US President Donald Trump, who has threatened sweeping tariffs if Canada deepens trade ties with Beijing.

Speaking to reporters, Carney said Canada’s recent engagement with China was aimed at resolving existing trade frictions and did not amount to a new free-trade pact. He stressed that such steps were fully aligned with Canada’s commitments under the United States–Mexico–Canada Agreement (USMCA), also known as CUSMA.

Under the agreement, Carney noted, member countries are required to notify partners before pursuing trade deals with non-market economies. “We have no intention of doing that with China or any other non-market economy,” he said.

Carney described the latest understanding with Beijing as a limited reset covering specific sectors, including electric vehicles and agricultural products. He said the arrangement complied with USMCA rules and reflected Canada’s intention to honour its treaty obligations.

Trump, however, continued to criticise Canada’s China engagement. In posts on his Truth Social platform, the US president warned that a 100 per cent tariff could be imposed on Canadian goods entering the United States if Ottawa struck a trade deal with Beijing. He accused China of gaining undue influence over Canada and mocked Carney by referring to him as “Governor.”

Earlier this month, Canada and China agreed on a strategic framework to ease trade tensions and expand cooperation, including increased access for Chinese investment. During a visit to Beijing, Carney described China as a more predictable trading partner than the United States and departed from Washington’s approach on tariffs for Chinese-made electric vehicles.

Under the arrangement, Canada agreed to allow nearly 50,000 Chinese electric vehicles into its market at reduced tariff rates, reversing a 100 per cent levy imposed in 2024. In exchange, Beijing rolled back retaliatory duties on Canadian canola seed, a key export.

US Treasury Secretary Scott Bessent said on Sunday that any new American tariffs would depend on whether Canada pursued a broader trade agreement with China and whether it allowed Chinese goods to enter the US market indirectly. He linked the issue to the upcoming renegotiation of the USMCA later this year.

Bessent said Washington would not allow Canada to become a channel for low-cost Chinese exports, adding that the US would closely scrutinise Ottawa’s trade policies during talks on the future of the agreement.

Trump has repeatedly criticised Carney since the Canadian leader’s speech at the World Economic Forum in Davos, where he delivered a pointed defence of the global rules based trading system remarks widely seen as a veiled rebuke of US trade policy.