• Canadian PM Mark Carney rules out a free trade agreement with China amidst U.S. threats.
• Trump threatens 100% tariffs on Canadian goods if trade deal with China is finalized.
• Canada adjusts tariffs on Chinese electric vehicles and canola to resolve trade tensions.

Canadian Prime Minister Mark Carney affirmed his government's position against pursuing a free trade agreement with China, stating that Canada is "bound by commitments" under the Canada-United States-Mexico Agreement (CUSMA). His remarks followed U.S. President Donald Trump's threats to impose sweeping tariffs on Canadian imports if Ottawa moves forward with a deal with Beijing, indicating that Canada "has no intention of doing that with China or any other non-market economy," according to latimes and indiatimes.

Trump's threats included a 100% tariff on Canadian imports, reinforcing the U.S. administration's concerns regarding Canadian-China trade relations. "We can’t let Canada become an opening that the Chinese pour their cheap goods into the U.S.," stressed U.S. Treasury Secretary Scott Bessent during an interview, reflecting the administration's protective stance. Bessent's comments underscored the concerns about potential dumping of Chinese goods in the U.S. via Canada, according to scmp and channelnewsasia.

During his recent visit to Beijing, Carney announced measures aimed at resolving tariff disputes, which include a limit on Chinese electric vehicle imports under preferential tariffs of 6.1%, in exchange for decreased Chinese tariffs on key Canadian products. Canada also expects China to ease its tariffs on canola, reducing them significantly from 84% to around 15%. This arrangement was seen as a counter to escalating trade tensions, particularly after both nations imposed reciprocal tariffs, according to latimes, indiatimes, and scmp.

Carney emphasized that the engagements with China do not constitute a strategic shift but rather focus on rectifying prior trade difficulties that emerged in recent years. Despite the initial U.S. support for the Canadian-China deal, the rapid escalation of tariff threats from Trump signifies a complicated backdrop for Canadian trade strategy, with concerns over U.S. economic repercussions looming large, as noted by latimes, channelnewsasia, and indiatimes.