Can Canada Depend on Deepening Relations with China?

Canada and China have recently hit the reset button on relations and trade amid escalating U.S. tariffs under the presidency of Donald Trump. Canadian Prime Minister Mark Carney recently became the first Canadian leader in nearly eight years to conduct an official state visit to China. During that visit, the prime minister was able to secure a strategic partnership and further reset trade relations. The deal that was secured reduces the 100 percent tariff rate on Chinese electric vehicles to just 6.1 percent for an estimated 49,000 units annually. In return, China has agreed to reduce its tariffs on Canadian canola from 85 percent to just 15 percent. The meeting and deal have been described as a major moment in modern China–Canada relations and are set to normalise ties between the two countries after a period of rocky relations. However, can Canada truly depend on deepening relations with China?

In relation to economic growth, China is Canada’s second-largest trading partner after the United States, with trade between the two countries reaching an estimated $118.7 billion in 2024. Canada’s step to reset and expand trade relations is a clear attempt to overcome the challenges it has faced in dealing with the United States. Trump’s tariff policy aimed at Canada has had a major effect on Canadian exports and, therefore, the wider Canadian economy. Around 68 percent of Canadian exports are destined for the American market, and Canada clearly seeks to relieve its dependence on the U.S. market. By importing affordable Chinese-made electric vehicles, there is potential to further develop Canada’s transition to green and new technologies, which would reduce costs for consumers and, in turn, boost competitiveness. The Canadian agricultural industry and farmers also stand to gain significantly from the deal due to reduced Chinese tariffs on Canadian agricultural products. Furthermore, developing cooperation in the energy sector and encouraging further investment in innovative technology could inject new vitality into the national economy, which is especially important as fragmentation and disruption in global supply chains continue.

Ultimately, it is wise for Canada to pursue a pragmatic approach when deepening ties with China. It is clear that this move will alienate the United States to some degree, especially as China is viewed as the primary economic rival. However, it must also be noted that Canada remains heavily reliant on trade with the U.S. market, and this shift risks further disruption on that front. Nonetheless, diversifying trade relations stands to increase Canada’s resilience against the vulnerabilities of overdependence on the United States. In turn, this provides Canada with greater leverage in negotiations with the United States than it previously possessed.