Carney Shuts Down China Free Trade Talk To Rebuff Trump’s 100% Tariff Threat

Ottawa is explicitly rejecting any China free trade track, after a US threat framed a China “deal” as a potential trigger for a blanket 100% tariff on Canadian goods entering the US.

President Donald Trump, in a widely circulated line, warned that “If Canada makes a deal with China, it will immediately be hit with a 100% Tariff against all Canadian goods and products coming into the U.S.A.”

Prime Minister Mark Carney, responding to the tariff threat, said Canada has commitments under CUSMA not to pursue free trade agreements with non-market economies without prior notification, adding Canada has no intention of doing that with China or any other non-market economy.

Dominic LeBlanc, Canada’s minister responsible for US Trade, said there is “no pursuit of a free trade deal with China,” and characterized the latest outcome as resolution on several important tariff issues, while emphasizing Canada-US economic and security ties aimed at benefiting workers and businesses on both sides of the border.

One market commentator said Treasury Secretary Bessent clarified the 100% tariff would only be implemented if Canada signed a free trade deal with China, and argued the CUSMA bars Canada from signing such a deal.

Who does China trade with?

Canada’s bilateral merchandise trade with China totaled $118.7 billion in 2024, down 1.1% from 2023. Canada’s merchandise exports to China were $29.9 billion, representing 3.8% of Canada’s total merchandise exports in 2024. Canada’s bilateral services trade with China reached $12.0 billion in 2024, an 11.2% increase since 2023.

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Meanwhile, US goods and services trade with China totaled an estimated $658.9 billion in 2024, up 2.6% or $17.0 billion from 2023. US total goods trade with China was $582.0 billion in 2024, with goods exports of $143.2 billion, down 3.0% or $4.4 billion from 2023, and goods imports of $438.7 billion, up 2.7% or $11.5 billion from 2023.

The US goods trade deficit with China was $295.5 billion in 2024, a 5.7% increase or $15.9 billion over 2023, underscoring the scale of US. China trade flows in the backdrop of a Canada-focused warning.

Nevertheless, Canada recently agreed to lower Chinese EV tariffs in exchange for a reduction of Chinese tariffs on canola and other Canadian agricultural products. Chinese authorities prepared the proposal for discussions with Carney during his official visit earlier this month.

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