China says Canada deal does not target the US after Trump tariff threat

January 26, 2026

U.S. President Donald Trump threatened to impose 100% tariffs on Canadian goods if Canada finalizes its recent trade arrangement with China, which reduces tariffs on Canadian canola oil and Chinese electric vehicles. Canadian Prime Minister Mark Carney clarified that the agreement is not a free-trade deal and emphasized that Canada would be obligated to notify the U.S. before signing any such arrangement with a non-market economy under existing USMCA rules. Both Chinese and Canadian officials defended the trade agreement as mutually beneficial and not directed against other nations.

Who is affected

Canada and Canadian exporters (particularly canola oil producers)
China and Chinese electric vehicle manufacturers
The United States and American trade interests
Prime Minister Mark Carney
President Donald Trump
Chinese foreign ministry spokesperson Guo Jiakun
U.S. Treasury Secretary Scott Bessent
Countries party to the USMCA agreement (U.S., Canada, and Mexico)

What action is being taken

Canada and China are lowering tariffs under their new strategic partnership (canola oil tariffs dropping from 85% to 15%, and Chinese EV tariffs reducing from 100% to 6.1%)
Canadian officials are communicating their position to American counterparts
Trump is threatening 100% tariffs on Canadian products
Carney is working to diversify Canada's trade portfolio

Why it matters

This dispute highlights growing tensions in the North American trade relationship and represents a potential fracturing of the longstanding U.S.-Canada economic partnership. The conflict signals a broader shift in global trade dynamics, where middle powers like Canada are seeking to reduce dependence on the United States while navigating between American and Chinese economic spheres. The threatened 100% tariffs could severely disrupt Canadian-American commerce, which has been largely barrier-free under USMCA, and the situation may set precedents for how the U.S. responds to allies engaging economically with China.

What's next

A mandatory USMCA review is scheduled for later this year
Canada's tariff reductions on Chinese canola oil are set to take effect by March
Carney indicated Canada will continue efforts to diversify its trade relationships and reduce dependence on the United States

Read full article from source: BBC