Canada Seeks "Turnaround" with China: Prime Minister Carney's Landmark Visit

Canadian Prime Minister Mark Carney has concluded a significant visit to China, marking the first such trip by a Canadian prime minister since 2017. The visit aimed to reset strained bilateral relations and diversify Canada's trade relationships, signaling a move towards a more independent economic posture.

During the visit, a trade agreement was reached, including mutual tariff reductions on electric vehicles (EVs) and agricultural products. This diplomatic engagement is central to Canada's broader strategy to reduce economic reliance on the United States and forge new international partnerships.

This strategy has also included visits to Australia and India and discussions about a "middle power" alliance.

Background to the Visit

Relations between Canada and China have faced considerable strain, particularly since 2018.

Periods of Strain and Recent Tensions

A significant downturn began with the 2018 arrest of Huawei executive Meng Wanzhou in Vancouver at the request of the U.S. This was swiftly followed by China's arrest of two Canadian citizens, Michael Kovrig and Michael Spavor, on espionage charges. All three individuals were released in 2021.

More recently, Canada's 2024 imposition of 100% tariffs on Chinese-made electric vehicles and 25% on steel and aluminum led to retaliatory tariffs from China on Canadian exports, including canola, seafood, and pork. Allegations of Chinese interference in Canadian politics were also subject to a public inquiry, which concluded the impact on recent federal elections was minimal.

Canada's Diversification Strategy

Prime Minister Carney's visit to China aligns with Canada's stated strategy to diversify its trade relationships and reduce economic dependence on the United States. Canada aims to double its non-U.S. exports over the next decade. This initiative is a response to rising trade tensions with the U.S., including tariffs implemented by President Donald Trump on Canadian goods.

China Visit Details and Engagements

Prime Minister Carney accepted an invitation to visit China from President Xi Jinping, following a meeting between the two leaders at the Asia-Pacific Economic Cooperation (APEC) summit.

During his visit, Prime Minister Carney met with Chinese President Xi Jinping, Premier Li Qiang, and Zhao Leji, Chairman of the Standing Committee of the National People's Congress. Discussions focused on trade, agriculture, and international security, with leaders directing officials to "move quickly to resolve outstanding trade issues and irritants." Carney also engaged with executives from prominent Chinese companies, including Alibaba, China National Petroleum Corp., and CATL.

Chinese state media encouraged Canada to establish a foreign policy path independent of the United States, advocating for "strategic autonomy." Chinese experts suggested common ground could be found in areas where Canada might feel unease toward U.S. actions.

However, China also acknowledged limitations to how much countries like Canada might shift away from the U.S., citing strong historical and cultural ties, concerns about China's influence, human rights, and Taiwan.

Notably, two Canadian Liberal lawmakers concluded a sponsored trip to Taiwan earlier than planned during the Prime Minister's visit, citing a need to "avoid confusion" regarding Canada's China policy.

Trade Agreement and Outcomes

Following the meetings, China and Canada announced tariff reductions and other agreements.

Tariff Reductions

• China is scheduled to reduce tariffs on Canadian canola oil from approximately 84-85% to 15% by March 1. Tariffs on Canadian lobsters, crabs, and peas were also reduced.
• Canada agreed to tax Chinese electric vehicles at the most-favored-nation rate of 6.1%, with an initial cap of 49,000 Chinese EV exports annually to Canada, projected to grow to 70,000 over five years.

Trade and Economic Roadmap

A roadmap was signed, outlining mutual investment interests. Ottawa indicated it welcomes Chinese investments in energy, agriculture, and consumer products, while Beijing expressed anticipation for Canadian investment in services, new materials, aerospace, and advanced manufacturing. Both sides agreed to explore cooperation in oil and gas development and natural uranium trade.

Strategic Partnership

A joint statement outlined a new strategic partnership between the two nations.

Leaders' Statements

Prime Minister Carney described discussions as "realistic and respectful," and the meetings as "historic and productive," stating the relationship had become more "predictable." He emphasized Canada's "red lines," including human rights and election interference, and stated Canada's approach is to "take the world as it is, not as we wish it to be."

President Xi expressed willingness to work with Canada to restore relations to a "healthy, stable, and sustainable correct track," and referred to the developments as a "turnaround" promoting "pragmatic, mutually beneficial ties."

Reactions and Perspectives on the Deal

The trade agreement elicited varied reactions.

Canadian Domestic Reactions

• Saskatchewan Premier Scott Moe welcomed the deal, citing relief for canola farmers.
• Ontario Premier Doug Ford criticized the reduction of EV tariffs, expressing concern about job losses in the province's auto sector and the entry of "cheap made-in-China electric vehicles."
• Conservative leader Pierre Poilievre questioned the Prime Minister's shift from previously identifying China as a security threat to announcing a strategic partnership.

Economic Projections

Vivek Astvansh, a business professor at McGill University, projected that lower EV tariffs could lead to Chinese automakers accounting for approximately 10% of Canada's electric vehicle sales, potentially pressuring U.S.-based EV manufacturers.

U.S. Reactions

U.S. Trade Representative Jamieson Greer described the deal as "problematic." However, President Donald Trump characterized the deal as "a good thing," stating, "If you can get a deal with China, you should do that." The U.S. reportedly observed the Canada-China discussions closely, given upcoming North American free trade agreement renewal talks. Senator Jeanne Shaheen expressed concern that U.S. policies might be inadvertently pushing allies towards China.

Canada's Broader Foreign Policy and International Engagements

Prime Minister Carney's visit to China is part of a broader foreign policy recalibration.

Carney's Vision for "Middle Powers"

He has advocated for "middle powers" such as Canada, Australia, Japan, India, and South Korea to collaborate to shape global rules, develop critical technologies, safeguard free trade, and uphold human rights. Carney has described the post-war international order as having "ruptured" and the previous system of "American hegemony" as no longer effective. His administration aims to build a "more competitive, sustainable, and independent economy" and reduce Canada's nearly 70-76% reliance on U.S. exports.

Prime Minister Carney's Background

Carney's background includes a PhD in economics from the University of Oxford, over a decade at Goldman Sachs, and serving as Governor of the Bank of Canada (2008) and the first non-British head of the Bank of England (2013-2020). He entered Canadian politics in early 2025, winning the Liberal leadership and subsequently the April 2025 federal election, with public opinion influenced by President Trump's statements regarding Canada. Polling data from 2025 indicated a negative view of the U.S. among 64% of Canadians and a lack of confidence in President Trump among 77%.

Continued International Engagements

Following his trip to China, Prime Minister Carney visited Australia (March 3-6) and India.

• Australia: During his visit, Carney addressed the Australian federal parliament, advocating for Canada and Australia to act as "strategic cousins" and enhance cooperation in critical minerals, defense, and trade. Australia joined Canada's G7 critical minerals alliance. New agreements were announced, including a pact on clean energy, biennial defense ministers' meetings, annual economic ministers' meetings, and collaboration in space and emergency management.
• India: Carney aims to improve relations with India, which experienced a diplomatic dispute in 2023. Canada is addressing "transnational repression and cross-border security" issues with India. A trilateral partnership involving Australia, Canada, and India focuses on technology and innovation, including critical minerals and artificial intelligence.

Carney is also scheduled to visit Qatar and attend the annual World Economic Forum in Davos, Switzerland.

Global Context: Western Engagement with China

Prime Minister Carney's visit to China occurred amidst a broader trend of Western leaders engaging with Beijing. This includes visits by the South Korean president, Irish prime minister, UK prime minister Keir Starmer, and Finnish prime minister Petteri Orpo, with German Chancellor Friedrich Merz also scheduled to visit. These engagements suggest a recalibration of relationships with China by some of America's allies, often in response to perceived shifts in global dynamics and trade policies.

European Union leaders have convened to discuss their diplomatic and trade approach amidst challenges from U.S. policies, China's economic tactics, and hybrid threats from Russia. Divisions exist within the EU regarding strengthening ties with Washington or pursuing "strategic autonomy" to reduce reliance on the U.S.