By The Scowcroft Group

January 11, 2026

When Prime Minister Carney visits China from January 13 to 17, his trip will mark the first by a Canadian prime minister since 2017.

Though the Canada-China relationship has been contentious in recent years (e.g., tensions rose over Canada’s criticism of China’s human rights record and the detainment of two Canadian citizens in China in retaliation for the arrest of Huawei CFO Meng Wanzhou), U.S. tariff uncertainty and protectionism have created incentives for both Ottawa and Beijing to diversify ties through new bilateral deals and “plurilateral” arrangements.

Over 75% of Canada’s exports are destined for the U.S., but China is Canada’s second-largest trade partner. Carney said that Canada should not rely on any single foreign entity (i.e., the U.S.) and set a goal to double non-US exports by 2035 (targeting China, India, the EU, and other markets).

The diversification of trade ties aligns with priorities outlined in Canada’s 2025 budget and helps advance Canada’s goals for defense, AI/high tech, critical minerals supply chains, energy, infrastructure (e.g., port infrastructure and over-land transportation), and more. It also attracts foreign investment and human capital.

Chinese President Xi in turn hopes to persuade Canada to remove its 100% tariff on Chinese electric vehicles – imposed in October 2024 to protect Canadian industry and align with the U.S. – in exchange for relief from China’s retaliatory tariffs; China announced in March 2025 tariffs from 25% to 100% on key Canadian agricultural exports (e.g., canola oil, pork, seafood). Xi-Carney discussions may also cover Canada’s 25% tariffs on goods with steel and aluminum originating from China, imposed in July 2025.

The trip comes as Canada awaits the resumption of bilateral trade talks with the U.S.  (stalled since October and which Ottawa expects in mid-January) and negotiates the USMCA’s renewal (the USTR report to Congress on its position on renewal, originally due by Jan. 3, has been delayed).

China is also preparing for a Trump visit in April and working to manage trade tensions. Underpinning all trade discussions with the U.S. is the impending Supreme Court decision on the Trump administration’s use of International Emergency Economic Powers Act (IEEPA) authority for tariffs.

Regardless of whether SCOTUS strikes down IEEPA, expect the uncertainty around tariffs to continue if not heighten. If IEEPA is revoked, the administration is likely to seek to fill the gap with a variety of alternative trade authorities (e.g., Sections 232 and 301).

Beyond trade, Carney may focus on security. Before his election, Carney characterized China as a “geopolitical threat.” He has noted concern over China’s support for Russia’s war in Ukraine and “destabilizing” actions in the East and South China Seas.

Taiwan is also a concern given the transit of Canadian ships in the Strait. Carney may be inclined to talk about, at least in general terms, security issues around Taiwan, the South China Sea, Ukraine, and other geopolitical hotspots, messages that Xi would likely receive with displeasure.

Expect Washington to watch Carney’s meeting with Xi closely as it considers next steps in its relations with Canada and China.

The Scowcroft Group is a Washington, D.C.-based international business advisory firm founded by the late Brent Scowcroft, former National Security Advisor to Presidents George H.W. Bush and Gerald Ford. Its principals generously provide Policy’s regular Letter from Washington.