By Lynette Ong

January 18, 2026

Prime Minister Carney’s mid-January trip to Beijing marked the first visit by a Canadian prime minister since the diplomatic rupture of 2018 following the arrest of the “two Michaels.” In Beijing, Carney described China as a “strategic partner” and declared Canada–China relations to be at a historic “turning point.”

Canada has agreed to lessen the 100% tariffs imposed on Chinese electric vehicles (EVs), while China will do the same for Canadian canola oil imports—the two principal sources of bilateral trade tension over the past year. In addition, the two countries signed a series of memoranda of understanding (MOUs) aimed at fostering trade in energy, clean technology, and agri-food.

Yet this rapprochement comes as a surprise: only a year ago, Carney referred to China as “the biggest security threat.” How, then, should we make sense of this apparent 180-degree turn in Canada’s diplomatic posture toward China?

First, allowing the import of up to 49,000 Chinese EVs at a tariff rate reduced from 100%to 6.1% may appear to be a major concession on Canada’s part—a concern raised by Ontario Premier Doug Ford. In reality, however, 49,000 vehicles represent only about 3% of the Canadian automobile market, concentrated at the lower end of the price spectrum.

These imports are therefore better understood as a goodwill gesture by the Carney government, signalling Canada’s intention to rebuild and deepen trade ties with China rather than as a threat to the domestic auto industry. Similarly, China’s decision to lower tariffs on Canadian canola oil imports from 85% to 15% should be viewed in the same light.

More importantly, Chinese automobile manufacturers may establish production facilities in Canada in the coming years, at which point Canada-made Chinese vehicles would replace imports from China. This shift would create jobs for Canadians, though it would also raise legitimate concerns related to national security and compatibility with USMCA provisions—issues that will require careful study and policy consideration.

The world has changed significantly since President Trump’s re-election a year ago. Trump’s tariff war, coupled with rhetoric about turning Canada into the 51st state, has posed a direct challenge to Canadian sovereignty. The United States was once Canada’s most important, strategic, and reliable ally, with whom we forged a deeply integrated political and economic partnership.

Carney’s pivot toward Beijing should be understood against this backdrop: it is a response to the effective severance of that economic partnership and, consequently, to the urgent need to diversify Canada’s trade away from the United States, where 75% of our manufactured exports are currently destined.

China, however, should be the starting point of this diversification strategy, not its endpoint. As the world’s second-largest economy, China is simply too large for Canada to ignore. At the same time, Canada should also deepen its engagement with rapidly growing economies across the Indo-Pacific—as outlined in the Indo-Pacific Strategy—as well as with Europe, the Middle East, and beyond.

Put simply and to quote Prime Minister Carney, Canada once placed too many eggs in the U.S. basket. Now, those eggs must be distributed across several baskets—China, the broader Indo-Pacific, Europe, and others—though China will inevitably account for the largest share given the sheer scale of its economy.

While Canada may be economically smaller than China, Ottawa should recognize that Beijing does not hold all the cards. In this evolving geopolitical environment, leverage and dependence run in both directions.

From the Chinese perspective, the global landscape also looks very different today than it did in 2018. China’s economy has yet to recover from the downturn in its real estate sector, which, at its peak, accounted for roughly 25% of GDP. Youth unemployment has remained persistently high—reaching levels as high as 25% since the end of the Covid-19 pandemic. The tech sector remains a bright spot but overall, China has doubled down on an export-led growth model to sustain economic momentum. Its trade war with the United States, along with growing resistance to Chinese exports in Europe, has forced Beijing to look elsewhere—including Canada—for new markets.

Canada is strategically important to China for another reason. Amid intensifying U.S.-China geopolitical competition and trade tensions, Beijing has a clear interest in maintaining stable relations with Washington’s closest neighbour—once one of America’s strongest allies, and the jurisdiction from which the detention of Huawei executive Meng Wanzhou was initiated.

While Canada may be economically smaller than China, Ottawa should recognize that Beijing does not hold all the cards. In this evolving geopolitical environment, leverage and dependence run in both directions.

Fundamentally, this trip should be understood as laying the groundwork for sustained engagement with China over the coming decades, rather than as a short-term tactical maneuver to extricate Canada from one of President Trump’s tariff tantrums.

The U.S.-led international liberal order is—for all practical purposes—over. In just the past month, the United States has withdrawn from 66 international organizations. At home and abroad, the Trump administration has increasingly behaved in ways more characteristic of an autocratic regime: casting aside international law to justify unilateral military action, wielding tariffs as punitive instruments against even traditional European allies for their dissent—most notably over Greenland—and allowing law enforcement agents to take the lives of innocent people with impunity.

To be sure, China is a one-party state ruled by the Chinese Communist Party (CCP) and espouses political values that are fundamentally irreconcilable with those of Canada. This reality creates a clear imperative for a middle power such as Canada to draw a distinction between economic and political partnership. Canada can—and must—forge economic ties with China despite deep divergences in political institutions and values. Values matter, but so too does the responsibility to maximize Canada’s national interests: preserving our way of life and sustaining the prosperity of Canadians are equally vital objectives.

There have long been concerns about Chinese political interference in Canadian democracy and the transnational repression of Chinese diasporic communities in Canada. These concerns can be expected to intensify in the coming years as economic engagement with Beijing deepens.

However, attempts at political interference that undermine the resilience of Canadian democracy or threaten the safety of Canadians require distinct and robust safeguard measures. Canada is home to one of the world’s largest Chinese diasporas—numbering nearly two million people—as well as a sizeable Hong Kong community.

Transnational repression reflects the Chinese Communist Party’s efforts to extend its coercive reach beyond its borders to influence diaspora populations. As such, these challenges should be anticipated and addressed regardless of the state of Canada–China trade relations.

As Prime Minister Carney has observed, we are now living in a “new world order”—one that signals the end of the U.S.-led liberal international system, whether we welcome it or not. In this new environment, political and economic partnerships can no longer be neatly bundled together, even if doing so once offered simplicity and convenience.

With China, Canada can ill afford to sacrifice its economic interests on the altar of political incompatibility alone. Embracing this distinction is neither naïve nor reckless; it is a bold but necessary posture for a middle power navigating an era of profound global disruption and geopolitical uncertainty.

Lynette Ong is Distinguished Professor of Chinese Politics at the University of Toronto and Director of the China Governance Lab at the Munk School of Global Affairs and Public Policy.