As tensions between the United States and Canada escalate, analysts say that Ottawa’s refusal to cede trade sovereignty to Washington over issues, including its economic ties to Beijing, has exposed the limits of American tariff pressure.
Negotiations between the US and Canada broke down late Friday, with both sides accusing each other of adding unreasonable last-minute demands. Walking away from the negotiating table, Canada said that the US had introduced, among other measures, efforts to restrict its authority to make independent trade agreements.
“This is clearly a reference to China,” said John Gong, a professor at the University of International Business and Economics in Beijing.
He noted that Canada had “stood firm” on the position that its relations with third countries were a matter of national sovereignty.
“This is certainly beneficial for China-Canada trade,” Gong added, noting that China could, for example, purchase more oil from Canada.
When asked by reporters why the United States might have made such a demand regarding Canada’s trading partners over the weekend, Canadian Prime Minister Mark Carney replied: “It’s a power play and becomes a question of sovereignty.”
“We are masters in our own home and the partner of choice abroad,” Carney said, noting that Canada has signed over 20 trade and security deals across five continents in the last year.
Those agreements would include a deal signed during Carney’s visit to Beijing in January, which lowered tariffs on a quota of Chinese electric vehicle shipments into Canada and reduced Chinese duties on Canadian canola seeds.
China was Canada’s third largest trading partner, behind Britain and the US, according to data from the Canadian government. But while Canada’s goods trade with China and Britain rose last year, trade with its southern neighbour fell following US President Donald Trump’s return to office.
The share of Canadian exports bound for the US stood at 72.5 per cent of its total exports in 2025 – still an overwhelming majority – but down nearly 4 percentage points to the lowest level since the early 1980s, according to official data.
Meanwhile, China’s expanding trade footprint remains a primary concern for Washington, which, citing national security risks, has accused Beijing of transshipping goods through third countries to bypass US tariffs, and has pressed trading partners to reduce Chinese goods in their supply chains.
Deborah Elms, head of trade policy at the Asia-based trade research organisation Hinrich Foundation, noted that Canada, like many countries, was evaluating its approach to Beijing as the global trading system shifts.
“They are wary of Chinese capacity and would normally be aligned with the US to address these concerns,” said Elms. “However, they are also not willing to let Washington have some sort of veto on Canadian actions.”
She added that the main disagreement lay in how commitments to address shared concerns would be implemented in practice.
Song Guoyou, deputy director of the Centre for American Studies at Fudan University, also noted that the breakdown in negotiations with Canada could “pose greater challenges for the US in exerting external trade pressure”.
The two countries have exchanged strong words and threats of further tariffs since talks ended without an agreement, concluding only moments before a 50 per cent levy on US$20 billion of Canadian imports into the US came into force.
Trump threatened to raise tariffs on Canadian cars, trucks and auto parts to 50 per cent on Monday, while Canada was expected to announce retaliatory tariffs against the US on Tuesday.
Carney said retaliatory tariffs might be used to protect Canadian workers and businesses, after he previously threatened to match US tariffs dollar for dollar.
In an editorial on Sunday, Chinese state media outlet Global Times praised Ottawa’s retaliatory tariffs, noting that China and Canada were the only nations “daring” to respond in kind to US trade pressures.
“No country has the privilege to monopolise the rules or dictate the fate of others,” the editorial said. -- SOUTH CHINA MORNING POST
