Canada Backtracks On China Trade, Limits EVs, While Trump Warns Tariffs Will Crush Market Access.
Canadian Prime Minister Mark Carney said Sunday that Ottawa has no plans to pursue a free trade agreement with China, pushing back against claims by US President Donald Trump that Canada was opening the door to Beijing at Washington’s expense.
Carney was responding to Trump’s warning that the United States could impose 100% tariffs on Canadian imports if Ottawa moved ahead with a broader trade pact with China. The prime minister clarified that Canada’s recent steps merely adjusted tariffs in a limited number of sectors after retaliatory measures escalated over the past two years.
Canada had aligned with the United States in 2024 by imposing steep tariffs on Chinese electric vehicles, steel, and aluminum. Beijing responded with heavy duties on Canadian canola, pork, and seafood. During a recent visit to China, Carney partially rolled back EV tariffs in exchange for relief on those agricultural exports, while introducing strict caps on Chinese vehicle imports.
Under the revised framework, Chinese EVs entering Canada will face a low tariff rate but remain capped at a small share of the domestic auto market. Carney said the agreement also anticipates future Chinese investment in Canada’s automotive sector, arguing there had previously been no limits at all.
Trump rejected that explanation, accusing Canada of risking its industrial base and becoming a transit point for Chinese goods into the US. US Treasury Secretary Scott Bessent echoed those concerns, warning that the North American trade framework would be revisited during renegotiations later this year.
The dispute has spilled onto the global stage. Speaking at the World Economic Forum in Davos, Carney urged middle powers to coordinate against economic coercion, comments widely interpreted as a veiled criticism of Trump. The tension comes as Trump’s renewed push involving Greenland has further strained relations within NATO, and as he continues to needle Canada over its sovereignty.
