The US Trade War: Why Canada is being Forced to Pivot Back to China
Canada China USA ForeignPolicy CanadianEconomy GlobalTrade Tariffs Diplomacy Trump StrategicPivot Carney
October 31, 2025
The recent meeting between Canadian Prime Minister Mark Carney and Chinese President Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in South Korea signifies a major turning point in the strained bilateral relationship.
Both leaders agreed to promote a return to a “healthy, stable and sustainable track” through pragmatic dialogue and directed officials to quickly resolve "outstanding trade issues and irritants."
This diplomatic reset is highly consequential, as it occurs against a backdrop of renewed and hostile trade tensions between Canada and the United States under President Donald Trump.
Historically, Canada and China have maintained a pragmatic relationship rooted deeply in commerce. Canada's earliest significant connection was through large-scale grain sales in the 1960s, which paved the way for formal diplomatic recognition in 1970 via the "Canadian Formula."
Over decades, trade flourished in resources and commodities, despite periods of tension over human rights and investment screening, such as the major CNOOC acquisition of Nexen in 2012–2013. However, relations deteriorated sharply following the 2018 detention of two Canadian citizens in retaliation for the arrest of Huawei executive Meng Wanzhou.
The urgency for a renewed China relationship is directly linked to the volatility of Canada’s largest trading partner, the United States. President Trump’s renewed imposition of punitive tariffs on key Canadian imports, particularly in the auto, steel, and aluminum sectors, coupled with aggressive rhetoric, has created significant economic uncertainty.
Foreign Affairs Minister Anita Anand stated that this renewed US hostility, along with the impending review of the CUSMA/USMCA trade pact, compels Canada to actively diversify its trade. Canada now sees China, its second-largest trading partner, as a necessary strategic partner for "recalibrating" its economic interests in a turbulent global environment.
This pivot involves a high-stakes geopolitical trade-off. To normalize relations, Canada and China must resolve retaliatory tariffs, including heavy Chinese duties on Canadian agricultural products like canola and seafood, which were imposed after Canada levied a 100% tariff on Chinese electric vehicles (EVs).
Removing the Chinese tariffs would provide immediate economic relief to Canadian exporters. However, securing this relief by dropping the Canadian EV tariff risks angering the US, which could interpret the move as Canada undermining the US's broader trade position against China. President Trump might respond with further punitive measures against Canadian exports.
Ultimately, Canada is facing a classic geopolitical dilemma: leveraging its second-largest economic partner (China) to gain better negotiating ground and stability against its largest, most unpredictable ally (the US).
For Canada, normalizing trade with China—and removing the disruptive costs of retaliatory tariffs on its own economy—is an essential act of economic self-preservation, ensuring stability for its working and middle classes, regardless of the potential friction it generates in Washington.
This strategic recalculation is particularly jarring given Canada's long history as the US's most steadfast partner. For decades, Canada has stood shoulder-to-shoulder with the United States, from sheltering tens of thousands of American citizens during the 9/11 attacks under Operation Yellow Ribbon to assisting in the covert extraction of six American diplomats during the 1979 Iran Hostage Crisis (the "Canadian Caper"), and participating actively in US-led military campaigns and security alliances like NORAD. The perception of being unfairly targeted by hostile tariffs, despite this deep-rooted alliance and history of mutual support, creates a compelling imperative for Canada to seek reliability and stability elsewhere, even if it means navigating complex geopolitical waters with China.
SNP
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