Canadian Prime Minister Mark Carney said Sunday that Canada has no intention of pursuing a free trade agreement with China, responding to U.S. President Donald Trump’s threat of a 100% tariff on goods imported from Canada.
Carney said his recent deal with China was not aimed at establishing a broader free trade agreement, but instead cuts tariffs on a few sectors that had been recently targeted with tariffs. He said the response from Washington came after Trump threatened to apply the tariff if Canada moved forward on a trade arrangement with Beijing.
Carney said the legal commitments tied to the free trade agreement among the United States, Mexico and Canada include not pursuing free trade agreements with “nonmarket economies” without prior notification. He said, “We have no intention of doing that with China or any other nonmarket economy,” and added that, “What we have done with China is to rectify some issues that developed in the last couple of years.”
The Associated Press report said the tariff and retaliation backdrop includes measures Canada took in 2024. It said Canada then imposed a 100% tariff on electric vehicles from Beijing and a 25% tariff on steel and aluminum, and that China responded with 100% import taxes on Canadian canola oil and meal and 25% on pork and seafood.
The report said Carney broke from the United States this month during a visit to China by cutting Canada’s 100% tariff on Chinese electric cars in return for lower tariffs on Canadian products. It added that Carney said the arrangement would include an initial annual cap of 49,000 vehicles on Chinese EV exports into Canada at a tariff rate of 6.1%, rising to about 70,000 over five years.
Carney also said the initial cap represented about 3% of the 1.8 million vehicles sold in Canada annually, and that there had been no cap before 2024. The AP report said he also described an expectation that China would begin investing in the Canadian auto industry within three years as part of the trade exchange.
The exchange unfolded alongside Trump’s public comments on the issue. The AP reported that Trump posted a video Sunday that included warnings from the chief executive of the Canadian Vehicle Manufacturers’ Association, saying there would be no Canadian auto industry without U.S. access and that the Canadian market alone was too small to justify large-scale manufacturing from China.
The report said Trump also posted that, “A MUST WATCH. Canada is systematically destroying itself. The China deal is a disaster for them.” It said Trump previously posted on Saturday that if Carney believed he could make Canada a “Drop Off Port” for China to send goods into the United States, he was “sorely mistaken.”
In the United States, Treasury Secretary Scott Bessent said on ABC’s “This Week” that “We can’t let Canada become an opening that the Chinese pour their cheap goods into the U.S,” the report said. It added that Bessent said the U.S.-Mexico-Canada Agreement is expected to be renegotiated this summer and said he was not sure what Carney was doing other than trying to “virtue-signal” to his “globalist friends at Davos.”
The tariff warning came amid what the Associated Press described as an escalating war of words between Trump and Carney that also includes Trump’s push to acquire Greenland and strained relations with NATO. The report said Carney has presented himself as part of a movement for countries to coordinate among themselves to counter the U.S. under Trump, citing his Davos remarks, “Middle powers must act together because if you are not at the table, you are on the menu,” and a warning about coercion by great powers without mentioning Trump by name.
The AP report said Trump’s Greenland push came after he repeatedly needled Canada over sovereignty, including suggesting Canada be absorbed into the United States as a 51st state. It said Trump posted an altered image showing a map that included Canada, Venezuela, Greenland and Cuba as part of its territory.