Canada’s Prime Minister, Mark Carney, confirmed on Sunday that his country has no plans to pursue a comprehensive free trade agreement with China.

The statement came in response to a threat from former U.S. President Donald Trump, who warned of a 100% tariff on Canadian goods if Ottawa proceeded with any broad trade pact with Beijing.

Carney emphasized that recent engagements with China were aimed solely at resolving specific tariff disputes, not establishing a free trade agreement, and stressed Canada’s obligations under the USMCA, which require prior notification before negotiating with non-market economies.

Resolution of Tariff Disputes

The trade adjustments between Canada and China addressed a 2024 tariff dispute, in which Canada imposed 100% tariffs on Chinese electric vehicles and 25% on steel and aluminum, while China retaliated with taxes on Canadian canola, pork, and seafood. Under the new arrangement, 49,000 Chinese EVs will be allowed into Canada annually at a 6.1% tariff, gradually increasing to 70,000 vehicles over five years.

The agreement also anticipates Chinese investment in Canada’s auto industry within three years, signaling a controlled economic engagement without broader free trade commitments.

Tensions with the United States

Trump’s aggressive stance against Canada’s negotiations with China has amplified diplomatic tensions. U.S. Treasury Secretary Scott Bessent criticized Canada for potentially serving as a conduit for Chinese goods into the U.S., while Trump’s social media posts and provocative imagery further strained relations.

Carney has positioned Canada as a leading “middle power,” advocating international cooperation to counter coercion by larger powers. Speaking at Davos, he stressed the importance of collaboration, warning, “if you are not at the table, you are on the menu,” in remarks widely interpreted as a subtle critique of Trump’s policies.