The package of concessions being brought home from Prime Minister Mark Carney’s trip to China is a game-changer for agriculture on multiple fronts.
There will be plenty of nitpicking to come, but the agreement significantly reduces the punishing tariffs China imposed on $2.6 billion in Canadian agricultural goods, while allowing Canadian consumers increased access to Chinese electric vehicles without gutting the Canadian auto sector. The question of whether pork will also see tariff relief remains unanswered.
But as details emerge, it’s clear that the mid-January discussions set a framework for ongoing engagement, increased investment and collaboration — while acknowledging that significant differences remain in how the two countries engage with the world.
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It’s a calculated risk. China’s propensity for meddling in domestic politics and intelligence gathering continues to be a threat. And whenever diplomatic headwinds start to blow, it seems agriculture gets swept up in the storm.
But for now, pragmatism has prevailed.
Allowing China to export 49,000 electric vehicles into Canada at the most-favoured nation tariff rate of 6.1 per cent is a sharp drop from the 100 per cent tariff imposed by the previous Liberal government under Justin Trudeau and returns imports to pre-2023 levels.
Canada’s decision to impose those steep tariffs aligned with U.S. policy at a time when North American auto manufacturing was fully integrated. The U.S. administration under Donald Trump has since abandoned its commitment to an integrated North American auto manufacturing sector, which erodes any rationale for Canada mimicking the U.S. blockade.
Canada’s EV manufacturing sector is in its infancy. If governments are serious about encouraging consumers to embrace renewable energy, it makes little sense to block imports that offer advanced technology as a more affordable option. At the same time, by offering China only limited access, the Canadian government does not completely erode prospects for the domestic EV industry.
Farm organizations were quick to applaud the announcements of reduced tariffs on canola, peas and seafood.
They just as quickly called for “pragmatic engagement with both the United States and China to protect tariff-free access and prevent farmers from becoming collateral damage in broader geopolitical disputes,” as Grain Growers of Canada worded it.
Farmers well understand that this thawing of diplomatic relations with China after nearly a decade of tense standoffs and economic warfare is likely to heat things up with the U.S., Canada’s other significant other, on the trade front.
It’s not easy to support Canadian livelihoods while wedged between your two biggest trading partners, who are simultaneously conducting economic warfare with both each other and you.
Let’s look at the numbers. Canada does about $80 billion in total trade with China annually. Our trade with the U.S. is much larger, about $1 trillion, not to mention our shared border.
U.S. media reporting on the Canada-China deal-making used it as evidence of a significant break with the U.S. Coverage in The Wall Street Journal cited former Canadian diplomats and foreign policy analysts as predicting the move will “annoy” the Trump administration.
And we know what happens when Donald Trump gets annoyed.
Well, actually, we don’t. Which is the whole problem and why defrosting Canada’s relationship with China has become even more important.
Trump didn’t react as negatively as expected, at least initially, even though some of his administration’s officials warned the Canada will regret this move.
It raises the spectre of U.S. retaliation. Will the news further jeopardize the Canada-U.S.-Mexico trade agreement up for review this year? Possibly, and there’s no denying that losing the predictability that agreement brings to the marketplace would be a major blow to farmers.
However, as U.S. foreign and domestic policy becomes increasingly unhinged, the odds of returning to the stability of the past four decades are falling faster than Trump’s popularity ratings.
By working with China, Canada is signalling its willingness to seek common ground in trade while respecting that the world isn’t always what we would like it to be.
This country has a long history of building trading and diplomatic relationships that focus on doing the right things for the right reasons. In the 1950s and 1960s, Canadian grain sales helped spare the people of China from famine at a time when many exporters refused to do business with a communist regime.
At the same time, the events of the past year aside, Canadians have on many occasions stood by the United States in times of crisis.
If Canada has any hope of emerging from these uncertain times with its sovereignty — and dignity — intact, its trade and foreign policy must be about more than ducking and dodging blows from bigger players.
The world has changed, but quiet diplomacy in pursuit of a rules-based global order is still Canada’s trump card.
