Key Takeaways:
- Canada’s Prime Minister Mark Carney is visiting China to discuss trade relations and potentially ease tariffs between the two countries.
- The visit is seen as a "test" for where relations may go, given the rocky relationship between Canada and China in recent years.
- Tariffs are currently in place on various industries, including agriculture, electric vehicles, and steel and aluminum.
- Canada is seeking to double non-U.S. exports over the next decade, with China being a key target due to its large economy.
- The visit may also be a strategy to add pressure on the U.S. to renegotiate the Canada-United States-Mexico Trade Agreement (CUSMA).
Introduction to Canada-China Trade Relations
Canada’s relationship with China has been strained for several years, with recent diplomatic tensions, including the arbitrary detention of two Canadians and the executions of four Canadians by Beijing. The global trade war sparked by U.S. President Donald Trump’s tariffs has also led to rounds of tariffs between Canada and China, covering industries like agriculture and electric vehicles. Prime Minister Mark Carney’s visit to China is raising questions about whether some tariffs between Beijing and Ottawa could soon ease. A recent Ipsos poll found that 54 per cent of Canadians support closer trade ties and economic agreements with China.
Background on Tariffs between Canada and China
The current tariffs between Canada and China are a result of a series of events that began in 2018, when the RCMP arrested Huawei CFO Meng Wanzhou in Vancouver at the behest of American authorities. China retaliated by arresting two Canadians, known as the two Michaels, on charges of espionage. Since then, there have been several rounds of tariffs imposed by both countries. Canada has imposed a 100 per cent tariff on imported electric and hybrid-electric vehicles produced in China, as well as a 25 per cent tariff on Chinese steel and aluminum. China has retaliated with duties of its own, including a 100 per cent tariff on Canadian canola oil, canola meal, and peas, as well as a 25 per cent tariff on Canadian pork and seafood products.
The Current State of Tariffs
The tariffs currently in place are having a significant impact on various industries, including agriculture and manufacturing. The Canadian canola industry, which generates over $43 billion per year and employs around 200,000 workers, has been particularly affected by the tariffs. Canola farmers from the Prairie province of Saskatchewan are hopeful that Carney’s visit to China will bring some relief to their industry. Carney is being joined by Saskatchewan Premier Scott Moe, who is also seeking to promote the interests of the canola industry. The tariffs on electric vehicles, steel, and aluminum are also a significant concern, as they affect the manufacturing sector and have implications for the broader economy.
What to Expect from Carney’s Meetings
Carney’s meetings with Chinese leaders are widely expected to include discussions on the tariffs, particularly those affecting the canola industry. Experts caution that Carney may have to offer some concessions to get any shifts from China. It is "almost guaranteed that China will reopen the agriculture market," according to Howard Lin, a professor emeritus and the founding director of the Canada-China Institute for Business and Development at Toronto Metropolitan University. However, this may require Canada to make concessions in other areas, such as exporting more oil or clean energy. The meetings may also be a strategy to add pressure on the U.S. to renegotiate the CUSMA, which is up for renegotiation this year.
Implications for Canada-U.S. Relations
The outcome of Carney’s meetings with Chinese leaders may have implications for Canada’s relationship with the U.S. The U.S. has been pushing for countries to crack down on trade with China, and any concessions made by Canada may be seen as a challenge to this effort. There is a risk that whatever comes from these meetings may affect the future of CUSMA, according to Kevin Bryan, an associate professor of strategic management at the University of Toronto. Chinese media has suggested that in order to mend ties between Canada and China, Canada will need to represent itself independently from the U.S. Carney and his team will need to be cautious in their approach, given the stakes involved.
Conclusion
In conclusion, Carney’s visit to China is a significant development in the ongoing trade saga between Canada and China. The visit is seen as a "test" for where relations may go, and the outcome may have implications for various industries, including agriculture and manufacturing. While there are risks involved, the potential benefits of easing tariffs and improving trade relations with China make the visit a worthwhile effort. As Canada seeks to double non-U.S. exports over the next decade, China remains a key target due to its large economy. The success of Carney’s visit will depend on his ability to navigate the complex web of trade relations between Canada, China, and the U.S.