Strategic Hedging Under Trade Pressure

Canada’s decision to re-engage China reflects a deliberate attempt to rebalance its economic exposure as relations with the United States deteriorate under renewed trade pressure. Canadian Prime Minister Mark Carney’s visit to Beijing this week, his first since taking office less than a year ago, marks Canada’s highest-level outreach to China in nearly a decade.

The core objective is said to be diversification. Carney has set a target to double non-U.S. exports over the next 10 years, a response to U.S. President Donald Trump’s tariffs and his repeated public remarks that allegedly questioned Canada’s sovereignty, including references to Canada becoming a “51st state.” Canada’s dependence is stark since the United States remains by far its largest trading partner, while China ranks second.

Carney framed the visit as part of a broader economic reset. “At a time of global trade disruption, Canada is focused on building a more competitive, sustainable and independent economy,” he said, adding that Ottawa is “forging new partnerships around the world.” The language underscores an effort to widen options without formally breaking alignment with Washington.

Trade Frictions and Limited Concessions

Canadian officials have cautioned against expectations of a breakthrough. Briefing reporters ahead of the trip, they said discussions with Beijing could ease specific trade irritants but would not eliminate existing tariffs. Canada currently imposes a 100% tariff on Chinese electric vehicles and 25% tariffs on steel and aluminum, mirroring U.S. measures. China has responded with tariffs on Canadian exports including canola, pork, and seafood, signaling it would consider relief if Ottawa dropped the EV tariff.

Carney is scheduled to meet Chinese President Xi Jinping on Friday, followed by talks with other senior officials. The visit comes as both China and Canada face external pressure from Washington. Zhu Feng, dean of international studies at Nanjing University in China, said Trump’s trade protectionism has created “new space” for China-Canada relations, while cautioning that Canada remains a U.S. ally bound by geography, culture, and long-standing security ties.

Diplomatic Optics and Political Sensitivities

The trip has exposed sensitivities within Canada’s domestic politics. Two Liberal lawmakers, Helena Jaczek and Marie-France Lalonde, cut short a sponsored visit to Taiwan ahead of Carney’s arrival in Beijing, citing government advice to “avoid confusion” over Canada’s China policy.

Canadian Opposition Conservative lawmaker Michael Chong criticized the move as “kowtowing to Beijing’s authoritarianism.” Ottawa stressed that the decision did not alter its stance on Taiwan, which China claims as sovereign territory and has said it would take by force if necessary.

The episode highlights the tightrope Ottawa is walking: seeking economic engagement with China while managing political values, alliance expectations, and regional flashpoints.

A Broader Recalibration of China Policy

Carney’s outreach fits a wider pattern among U.S. allies recalibrating relations with Beijing. Australian Prime Minister Anthony Albanese reset ties after taking office in 2022 following Chinese trade restrictions. U.K. Prime Minister Keir Starmer has also pursued improved engagement, raising human rights concerns such as the case of British citizen Jimmy Lai during talks with Xi in late 2024. Canada’s own relationship with China deteriorated sharply after the 2018 detention of Huawei executive Meng Wanzhou at U.S. request, followed by China’s arrest of Canadians Michael Kovrig and Michael Spavor. All three were released in 2021.

Carney will remain in China until Saturday before visiting Qatar and then attending the World Economic Forum in Davos next week. His itinerary signals a broader effort to reposition Canada amid shifting global trade dynamics, without abandoning core alliances or fully reversing recent China-related security and trade policies.