As the U.S. trade war drags, calls grow for Canada to cautiously improve ties with China

As Prime Minister Mark Carney's government works to reshape its economic policies amid an unpredictable administration south of the border, Canadian businesses that trade with China say Ottawa needs to find ways to expand exports there — and fast.

While the Canada-China relationship has been stymied in recent years, there are signals of relations improving.

Following the first ministers' meeting in Saskatoon earlier this month, Carney said Canada and China were meeting at the ministerial level to address a tit-for-tat trade war between the two countries that saw Canada place 100 per cent tariffs on Chinese-made electric vehicles and China retaliate with similar levies on canola meal and seed, pork and seafood.

Carney called negotiations with China "a top priority for us," as the federal government seeks to have the counter-tariffs on the agricultural products removed, and the two countries recently agreed to regularize communications.

The potential thaw comes as U.S. President Donald Trump has imposed shifting tariffs on much of the world, including 50 per cent on Canadian steel and aluminum imports, and 25 per cent on many cars and auto parts.

That's left businesses and analysts calling for Ottawa to fortify Canada's economy, including by overcoming political and infrastructure challenges to increase trade with China.

In fact, there are signs it's already happening, for various reasons.

According to Statistics Canada, as Canadian exports to the U.S. were down 15.7 per cent in April, exports to countries other than the U.S. increased 2.9 per cent that same month, led by exports to China, the U.K., Algeria and Brazil.

Notably, oil exports to China have risen since the Trans Mountain Pipeline started operating in May 2024. In the last few months, it has emerged as the top customer for Canadian crude.

According to the Conference Board of Canada, Canada's trade with the world's second-largest economy is currently hampered by political tensions that, if overcome, will continue to be "a key export market."

"There's clearly demand. And Chinese demand is willing to step in and fill that gap that's been left by the closing of access to American markets," said Conference Board senior economist Liam Daly.

Even though China is Canada's second-biggest trading partner, there's room for growth; Canada exported $30 billion worth of products to China in 2024 — a fraction of the whopping $500 billion shipped to the U.S., said Daly.

Canada is also running an increasing trade deficit with China — $57 billion in 2024.

If and when the tariffs and counter-tariffs are removed, the growth in exports could come in the form of raw goods, like timber, wheat, lentils and energy, according to Josipa Petrunic, president and CEO of the Canadian Urban Transit Research & Innovation Consortium (CUTRIC), an industry organization that is staunch advocate of Canada removing Canada's EV tariffs on China.