Canada-China Trade: Carney & Rethinking “America First”

Canada’s prime minister is set to visit Beijing this week, marking the first trip by a Canadian leader in nearly a decade, as Ottawa seeks to mend relations with a global superpower amid shifting economic and political alliances. The visit comes after Mark Carney, during the recent spring election campaign, identified China as Canada’s “biggest geopolitical risk,” citing concerns over election interference and disputes in the Arctic.

Shifting from ‘America First’

Since becoming prime minister, Carney has signaled a desire to reset the relationship between Canada and China, pushing a “reliance to resilience” plan to diversify trade away from the United States, which currently buys 76% of Canada’s exports. The “America First” economic policy pursued by the White House has prompted a reevaluation of Canada’s economic structure.

While Canada’s federal government has focused on its Indo-Pacific strategy to forge new partnerships, it also aims to increase its presence in China, currently accounting for only 4% of its exports. Following meetings between Canadian ministers and their Chinese counterparts, Carney met with Chinese premier Li Qiang in September, and subsequently spoke with President Xi Jinping on the sidelines of a global summit in South Korea, stating the relationship had reached a “turning point.”

A Fraught Relationship

Despite diplomatic cordiality, those briefing Carney “don’t have any illusions about the kind of leader they’re dealing with,” according to sources. The relationship remains complex, particularly in light of past incidents.

In 2018, Chinese officials ordered the detention of Michael Kovrig and Michael Spavor, jailing them for over 1,000 days in response to the arrest of Huawei executive Meng Wanzhou. These arrests and the ensuing diplomatic standoff halted progress toward a free trade agreement between the two countries. Canada has historically looked to China as a key market for its heavy oil, metallurgical coal, timber, and agricultural products.

Concerns remain regarding allegations of Chinese meddling in Canada’s electoral system, though officials believe these efforts did not alter the outcomes of the past two elections. China has also demonstrated a willingness to impose punitive measures on Canadian industries, such as the 100% duties placed on Canadian canola oil and meal after Canada joined the US in imposing tariffs on Chinese electric vehicles in 2024.

“It’s understandable that the prime minister is looking for other markets. We do need to diversify – that’s very clear,” said Margaret McCuaig-Johnston, a senior fellow at the University of Ottawa’s Graduate School of Public and International Affairs. However, she expressed concern about Beijing encroaching into the clean energy sector.

Analysts suggest a successful visit by Carney could lead to a series of agreements beneficial to both sides. However, Kovrig hopes Carney will also address longstanding issues of political detainees and human rights violations during the summit, cautioning that Beijing may attempt to leverage Carney’s reputation for its own benefit.

China’s recent actions, including the execution of four Canadian citizens despite protests, the conviction of pro-democracy activist Jimmy Lai, and increased presence in the Arctic, including the placement of monitoring buoys in Canadian waters, continue to raise concerns.

“The reality is: we should stay miles and miles away from any discussion of aerospace technology, artificial intelligence and critical minerals,” McCuaig-Johnston added. “This is a very challenging diplomatic trip and I hope we can make some safe deals on trade, but we must be careful about not opening up other sectors and putting them at risk.”