Canada won’t be derailed in its efforts to diversify trade away from the US despite the latest threats from the Trump administration, Canadian Foreign Minister Anita Anand said.
President Donald Trump took a swipe at Prime Minister Mark Carney on social media on Saturday, saying he would place a 100% tariff on all Canadian goods if Canada becomes a “drop off port” for Chinese exports to the US. That was a response to a recent agreement that will see Canada reduce tariffs on Chinese electric vehicles in return for trade concessions on food, including canola and beef.
Canada isn’t negotiating a free trade deal with China, Anand reiterated in an interview Sunday with the Canadian Broadcasting Corp. But the country has no choice but to forge ahead with its strategy to double its non-US exports within 10 years, she suggested.
“We need to protect and empower the Canadian economy and trade diversification is fundamental to that,” Anand said. “That is why we went to China, that’s why we will be going to India and that is why we won’t put all our eggs in one basket.”
Energy Minister Tim Hodgson is heading to Goa, in western India, where he’ll attend an energy conference and hold meetings with officials in Indian industry and Prime Minister Narendra Modi’s government.
The two sides are expected to talk about cooperation and potential deals on critical minerals, uranium and liquefied natural gas. Canada has an abundance of those resources. Carney is also planning to visit India soon, and he’ll be making a trip to Australia in March.
Anand emphasized, however, that Canada and the US still have a strong relationship and she expects that will continue.
It’s one of the world’s largest bilateral trade relationships, in fact. Despite ongoing tensions over tariffs, the US exported about $280 billion of goods to Canada in the first 10 months of last year — more than to any other country — while importing $322 billion from Canada, according to US Commerce Department data.
The countries’ automotive industries are particularly intertwined, which is one reason why Canada’s deal with China — though limited to just 49,000 Chinese EVs annually — struck a nerve in the US.
“We have a highly integrated market with Canada,” US Treasury Secretary Scott Bessent said Sunday on ABC’s This Week. “The goods can cross across the border during the manufacturing process six times. And we can’t let Canada become an opening that the Chinese pour their cheap goods into the US.”
He also warned that China could face additional penalties, including tariffs from the US, if any agreements go further than what has already been announced.
Chinese Foreign Ministry spokesman Guo Jiakun said Beijing and Ottawa “established a new type of strategic partnership, and made some specific arrangements on properly handling the economic and trade issues between the two countries.”
It “does not target any third party,” Guo said at a regular press briefing in Beijing on Monday, and “serves the common interests of people of both countries.”
Read More: Trump’s Latest Canada Threat Previews Rocky USMCA Talks
A fracture in the North American relationship contains far more economic risk for Canada, as a smaller and less diversified economy.
“If there were 100% tariffs on Canada it would be a disaster. I guess my question would be, what’s the likelihood of that happening?” said Randall Bartlett, deputy chief economist at Desjardins Group, a Canadian financial firm.
Trump has a habit of issuing tariff threats and then walking them back, “so the likelihood of that is very small,” Bartlett said.
Not everyone thinks Carney’s tariff agreement with China was a wise move or a low-risk one.
Barry Appleton, an international trade lawyer who’s a dual US-Canadian citizen, noted that the US-Mexico-Canada Agreement contains a provision that requires Canada to notify the US before it starts free trade negotiations with a non-market country. But USMCA doesn’t really define what a “free trade agreement” is, Appleton wrote over the weekend.
That has left Canada open to retaliation from the US, he said in a Substack post. “Canada’s defense is legally fragile and strategically reckless.”
This report is auto-generated from Bloomberg news service. ThePrint holds no responsibility for its content.