Donald Trump displayed little concern when questioned about the recent agreement negotiated by Prime Minister Mark Carney with China. The U.S. president expressed approval for the deal, stating that it was a logical move. Trump made the remarks at the White House, emphasizing that signing a trade deal with China was a positive step. The prospect of such an agreement had been under discussion for over a year before Carney’s visit to Beijing this week.
The challenge for Carney lay in reaching a politically acceptable deal while avoiding upsetting key stakeholders, such as the auto industry and Ontario Premier Doug Ford. With the impending review of the Canada-U.S.-Mexico Agreement (CUSMA) later this year, the Canadian delegation had to navigate carefully to maintain a balanced approach that would not provoke the unpredictable U.S. president.
The trade deal with China permits the import of 49,000 electric vehicles (EVs) into Canada initially, representing around three percent of total vehicle sales in the country. Additionally, the agreement reduces Beijing’s tariffs on canola products but does not eliminate them. According to Jim Thorne, Chief Market Strategist at Wellington Altus, the deal does not violate any red lines set by the U.S. administration.
While some American media outlets viewed the agreement as Canada distancing itself from the U.S., Thorne suggests that Trump should view the Canada-China deal as a constructive benchmark rather than a challenge. Trump has consistently expressed concerns about China’s influence in North America over the years.
U.S. Trade Representative Jamieson Greer described the deal as problematic for Canada, citing the protectionist measures in place for American auto workers. Transportation Secretary Sean Duffy expressed his belief that Canada might regret allowing Chinese cars into its market but reassured that the deal would not disrupt supply chains between the two countries.
Karl Schamotta, Chief Market Strategist at Corpay, noted that Carney’s team skillfully skirted issues that could provoke a backlash from the U.S. administration. He suggested that the agreement might have received tacit approval through unofficial channels, leading U.S. officials to largely ignore the development.
The reaction to the deal indicates a muted response from the U.S., with Trump’s stance expected to unfold gradually. Observers like Goldy Hyder speculate that the U.S. could be monitoring the implications of the Canada-China deal for their own trade negotiations. The evolving dynamics between the two nations will likely shape future trade relations, with potential implications for the automotive industry.
In conclusion, the Canada-China trade deal underlines the delicate balance Canada must maintain in its trade relationships, particularly amidst the shifting geopolitical landscape and the evolving priorities of the U.S. administration.
