U.S.-Canada trade ties face strain but remain massive

Canada is refusing to change course on trade, even as pressure ramps up from Washington. Foreign Minister Anita Anand said the government will keep pushing to reduce its reliance on the United States, despite fresh tariff threats from President Donald Trump.

The message from Ottawa is that trade diversification stays on track, and outside pressure will not rewrite that plan.

President Donald Trump, now the 47th U.S. president, fired off a post on social media on Saturday aimed at Prime Minister Mark Carney. He said he would impose a 100% tariff on all goods if Canada turns into what he called a “drop off port” for Chinese exports heading into the U.S.

The post came after a new agreement where Canada agreed to lower tariffs on Chinese electric vehicles in exchange for food trade relief, including canola and beef.

Trump threatens tariffs after China-linked trade shift

Anand responded by shutting down talk of a broader China deal. She said the country is not negotiating a free trade agreement with Beijing. She said the government is acting out of necessity, not ideology. The plan is to double non-U.S. exports within ten years. She said the economy needs protection, and trade diversification is a key part of that goal.

“We need to protect and empower the Canadian economy, and trade diversification is fundamental to that,” Anand said. “That is why we went to China, that’s why we will be going to India, and that is why we won’t put all our eggs in one basket.”

Energy Minister Tim Hodgson is already moving on that plan. He is traveling to Goa in western India for an energy conference. He will also meet officials from the Indian industry and the government, led by Prime Minister Narendra Modi.

Talks are expected to cover cooperation on critical minerals, uranium, and liquefied natural gas. Canada holds large reserves of all three. Carney is planning his own visit to India soon, followed by a trip to Australia in March.

U.S.-Canada trade ties face strain but remain massive

Anand also said the relationship with Washington remains strong. She said she expects that to continue, even with ongoing tariff disputes. The numbers back up how deep the ties run. The U.S. exported about $280 billion in goods to Canada in the first ten months of last year.

That was more than it sold to any other country. During the same period, the U.S. imported $322 billion in goods from Canada, based on Commerce Department data.

The auto sector sits at the center of that link. Manufacturing on both sides of the border is tightly connected. That is one reason the China electric vehicle deal caused anger in Washington. The agreement allows just 49,000 Chinese EVs per year, but it still hit a nerve.

“We have a highly integrated market with Canada,” U.S. Treasury Secretary Scott Bessent said Sunday on ABC’s This Week. “The goods can cross the border during the manufacturing process six times. And we can’t let Canada become an opening that the Chinese pour their cheap goods into the US.”

Economists say the risk from a real break is not equal. A major trade rupture would hit Canada harder due to its smaller and less diversified economy.

“If there were 100% tariffs on Canada, it would be a disaster. I guess my question would be, what’s the likelihood of that happening?” said Randall Bartlett, deputy chief economist at Desjardins Group.

Bartlett added that Trump often issues tariff threats and later reverses course, saying the chance of full tariffs is low. Trump continued posting on Sunday, again linking China to Canada, writing on Truth Social: “China is successfully and completely taking over the once Great Country of Canada. So sad to see it happen. I only hope they leave Ice Hockey alone!”

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