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<\/p>\nAmerica\u2019s top trading partners are responding to US President Donald Trump\u2019s belligerent and unpredictable trade policies by trying to take their business elsewhere.<\/p>\n
Canada broke with the US on Friday, slashing its 100% import tax on Chinese electric vehicles in return for lower tariffs on Canadian farm products, particularly canola seeds.<\/p>\n
“It\u2019s a huge declaration of realignment in Canada\u2019s economic relations,” said Edward Alden, who studies trade issues as a senior fellow at the Council on Foreign Relations. <\/p>\n
“The economic threat from the United States is now perceived by Canadians as far bigger than the economic threat from China. So this is a big deal.\u2019”<\/p>\n
Canada has repeatedly been the target of Trump\u2019s impulsive wrath. <\/p>\n
In October, for instance, he said he was imposing a 10% tariff on Canadian imports as a reprisal for Ontario\u2019s provincial government airing an advertisement that criticised the president\u2019s go-to diplomatic tariff tool. <\/p>\n
He didn\u2019t follow through on the increase, but tariffs on some key Canadian sectors like steel and aluminium remain.<\/p>\n
But Friday’s deal with China is potentially perilous one for Canada\u2019s prime minister, Mark Carney, who risks retribution from Trump on the eve of negotiations over the renewal of a North American trade pact that is crucial to Canadian businesses.<\/p>\n
Trade partners seek alternatives to the US<\/p>\n
<\/p>\n
President Donald Trump speaks during a tour of the Ford River Rogue complex in Dearborn, Mich. (Source: Associated Press)<\/p>\n
Canada is not alone in looking for alternatives to America\u2019s massive market as Trump slaps massive tariffs on imports in an attempt to strong-arm other countries into moving production to the United States.<\/p>\n
The European Union formally signed a trade pact Saturday with the South American alliance known as Mercosur, which includes the region\u2019s two biggest economies, Brazil and Argentina. The EU is also pursuing a trade deal with India.<\/p>\n
China, pounded by US tariffs since Trump\u2019s first term, has diversified its exports away the world\u2019s biggest economy to markets such as Europe and Southeast Asia. <\/p>\n
It seems to be working. China\u2019s trade surplus with the rest of the world surged to a record US$1.2 trillion in 2025, the Chinese government reported Wednesday, despite tumbling exports to the US.<\/p>\n
Since returning to the White House in January, Trump has overturned seven decades of US policy in favour of ever-freer trade. <\/p>\n
He\u2019s imposed double-digit taxes on imports from almost every country on Earth as well as singling out specific industries, such as steel and autos, for levies of their own.<\/p>\n
Trump says tariffs will raise money for the US Treasury, protect American industries, bring investment into to the United States. <\/p>\n
On Thursday, in fact, Taiwan agreed to invest US$250 billion in the United States in return for Trump reducing the tariff on its products to 15% from 20%.<\/p>\n
The president\u2019s use of tariffs has often been arbitrary and unpredictable.<\/p>\n
He targeted Brazil, for instance, for prosecuting his friend, former Brazilian president Jair Bolsonaro. On Friday, he threatened to slap tariffs on countries that don\u2019t support his efforts to wrest control of Greenland from Denmark.<\/p>\n
Canada has its own complicated relationship with China<\/p>\n
Friday\u2019s deal in Beijing marks a turnabout in Canadian policy.<\/p>\n
In 2024, Canada had followed the US by imposing 100% tariffs on EVs from China, reflecting fears that inexpensive Chinese cars would overwhelm domestic North American automakers.<\/p>\n
But the deal with China delivers benefits to Canada.<\/p>\n
First, its canola farmers need export markets, and this pact lowers China\u2019s tariff on canola from 84% to 15%. Canola farmers are hailing Canada\u2019s new trade deal with China as great news that could restore exports for the major crop.<\/p>\n
Second, the Trump administration, favouring fossil fuels over green energy, “is actively hostile to EV production in North America”, said economist Mary Lovely, senior fellow at the Peterson Institute for International Economics. <\/p>\n
America\u2019s opposition \u201cthreatens to make the North American (auto) industry obsolete in the future, as China moves ahead with rapid quality improvements in batteries and electronics for EVs.”.<\/p>\n
“China\u2019s strengths in electric vehicle sector are undeniable,” Carney said Friday. <\/p>\n
“China produces some of the most affordable and efficient energy efficient vehicles in the world. And in order for Canada to build our own competitive EV sector, we need to learn from innovative partners, access their supply chains, and increase local demand.\u2019”<\/p>\n
But Carney\u2019s economic rapprochement with Beijing amounts to a gamble.<\/p>\n
\u201cThis was an extraordinarily difficult thing for Carney to do,\u2019\u2019 Alden said. <\/p>\n
\u201cRelations between Canada and China have been extremely fraught.\u2019\u2019<\/p>\n
In 2018, China detained two Canadians in retaliation for Canada arresting an executive of the Chinese tech firm Huawei at the request of the United States. <\/p>\n
All three were released in a 2021 swap. Canada also launched an investigation three years ago into whether the Chinese interfered in Canadian elections in 2019 and 2021.<\/p>\n