Canada’s Deal with China: America’s Strategic Countermove

“Politics makes strange bedfellows.”

Canada’s deal with China perfectly fits the above quote. Some of Trump’s policies and tariffs on Canadian products put a strain on the relationship between the two countries. Then China comes into the picture, and Canada starts to shift its relations with the US’s rival. Washington is watching this very closely, and we discuss the possible reaction in this article.

Why Canada is Looking Toward China?

Since Trump imposed tariffs on Canadian products, Canada has been moving away from the US. According to data, Canada exports more than 70% of its products to America alone. This shows you how much Canada is dependent on America. But now it wants to become an independent trading country.

What Exactly Is Canada’s Deal with China?

Before America’s tariffs on Canadian exports, Canada and China had applied tariffs on each other. Now, what’s included in the deal between the two countries? Let’s shed some light on it:

• Mark Carney removed tariffs on Chinese electric vehicles. Similarly, Xi Jinping eased tariffs on Canadian agricultural exports.
• $4 billion in Canadian exports will go to China each year.
• Ottawa reduced 100% tariffs on Chinese electric vehicles (EVs), where just a 6.1% tariff will apply to 49,000 vehicles. Beijing slashed tariffs from nearly 85% to 14.9%.
• Chinese people will get meat from 20 registered Canadian meat establishments.

Why Is Washington Concerned?

“If Canada can’t protect its north, the U.S. will.” 

This stance comes from American security analysts. Washington remains concerned about its national security, especially from Russia and China in the Arctic Region. Here are the primary reasons for Washington’s concerns:

i. National Security Concerns

Canada’s deal with China signals it is serious about shift from US. The Trump Administration is taking it as a national security risk. China will get a backdoor in North America through this deal. Many Chinese Electric Vehicles will enter Canada through this deal. But American military experts believe that China will collect the data using such technologies.

ii. Economic Competition

China alone manufactured nearly 70% of EVs in the world. Many Chinese companies like BYD, Geely, XPeng, etc. will dominate the American automotive companies Tesla, Rivian, Lucid Motors, etc in North America. These Chinese EVs could also become accessible to American citizens through Canada as an entry point. Due to the lower prices of such Chinese EVs, this may cause a decrease in the sales of American EVs.

iii. Geopolitical Influence

Many experts believe that China is winning because of a deal with America’s major ally. This type of deal will undermine the pressure on China. US Federal Authorities know the importance of the Arctic region for their sovereign integrity. The administration is already concerned about the security of some parts of Canada. Even Trump’s past clash with Europe over Greenland was because of vulnerabilities in the Arctic region.

America’s Strategic Countermove

“Progress made with China sets Canada up ‘well for the new world order,’” said Mark Carney. This shows Canada’s shift towards China is inevitable, which is going to change the world order. Canada’s deal with China will not keep America silent. So Donald Trump would play cards according to U.S. interests.  Let’s take a closer look at how the U.S.A. can play its cards against the Canadian government.

1. Economic Pressure

Washington might further increase tariffs on Canadian exports. The auto industry may be affected by the economic pressure. Additionally, the U.S. administration no longer supports the USMCA trade agreement.

2. Reducing Intelligence Sharing

The White House is always concerned about Chinese dominance, including security concerns around the world. So, U.S. authorities might stop intelligence sharing through alliances such as the Five Eyes and the North American Aerospace Defense Command (NORAD).

3. Alberta Prosperity Project (APP)

Reuters claimed that a U.S. State Department official met with the Alberta separatists, which may put pressure on Canadian authorities by supporting the Alberta separatism movement. However, U.S. officials denied the allegation of supporting such separatist movements. It could be one of the strategic cards Trump may choose to play.

4. Diplomatic Pressure

Through the G7 and other allies, the USA might influence the Canadian government. Canada’s major and important defence partner is America, which could be another card on the table for the Trump administration.

5. Investment Restrictions

Washington, D.C. might revoke joint investments with the Ottawa government. Canada’s deal with China may be impacted in the semiconductor, AI, or telecom sectors if Washington’s policymakers adopt it as a strategy.

6. Political Pressure

The American leadership might support the opposition parties challenging Mark Carney. The U.S. also keeps the option to support an anti-China political party in Canada in reserve.

Final Thoughts

Canada’s deal with China is a major geopolitical turning point that could reshape global alliances. From Washington’s perspective, it will be a major challenge for U.S. dominance in North America as well as in other continents. The big question now is how the Trump administration will tackle this by easing some tariffs on Canada or whether China will win in this chess move.

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