Why Donald Trump endorsed Canada's deal with China

Donald Trump barely shrugged when asked about the deal Prime Minister Mark Carney forged with China this week. The U.S. president said such a deal simply made sense.

“Well, that's OK, that's what you should be doing. I mean, it's a good thing for him to sign a trade deal. If you can get a deal with China, you should do that, right?” said Trump at the White House on Thursday.

Heading to Beijing for this week’s meeting, there was never any question that a deal could be made. The outlines of such an agreement have been publicly debated for more than a year.

The issue was whether Carney could find a deal that was politically palatable. On the one hand, he couldn’t afford to anger the auto industry or Ontario Premier Doug Ford.

But with the renewal of the Canada-U.S.-Mexico Agreement (CUSMA) looming later this year, the Canadian delegation had to walk a fine line that wouldn’t upset the notoriously mercurial U.S. president.

“Our advice has been ‘do no harm’ to the review and renewal of USMCA," said Goldy Hyder, president and CEO of the Business Council of Canada, referring to CUSMA, which is also known as the U.S.-Mexico-Canada-Agreement.

"We can’t be seen to be abandoning North America and moving on to some other pastures.”

The deal only allows 49,000 EVs into Canada to start (that’s about three per cent of all vehicles sold in this country) and lowers Beijing's tariffs on canola products but it doesn’t eliminate them.

Jim Thorne, chief market strategist at the wealth management firm Wellington Altus, says it doesn’t cross any red lines for the U.S. administration.

“Carney is testing where that red line is,” he told CBC News.

Many American media outlets framed the Carney deal as a break from the U.S.; that Canada was trying to diversify from an increasingly hostile neighbour.

But Thorne says that misses the broader point. He says the Canada-China deal can and should be seen by Trump as a useful reference point rather than a provocation.

“I look at the Canada-China deal as a litmus test that the Americans are looking at,” he said.

Donald Trump's red lines have shifted over time. But his concern about China gaining a foothold in North America is one that he’s consistently warned about for decades.