How inconsistent U.S. foreign policy is causing Canada to venture across the Pacific.
Canada and China are teaming up, and geopolitical doomsday is around the corner for the United States. While that headline isn’t true, it was easy to jump to the conclusion after Canadian Prime Minister Mark Carney ominously declared at the annual World Economic Forum meeting in Davos, Switzerland on January 20, 2026 that it was time for middle powers like Canada to unite and accept that “the old order is not coming back.” His remarks came just days after reaching a trade agreement with Chinese President Xi Jinping in Beijing. In reality, Canada isn’t blindsiding the U.S.; Carney’s address and Canada’s revised mercantile strategy reflect a growing emphasis on ensuring Canadian economic stability in response to the recent volatility of U.S. global policymaking.
On January 14, a week before his Davos address, Carney made history by arriving in Beijing to meet with President Xi on the premise of revising bilateral policies surrounding energy, agriculture, and international security. Two days later, Carney announced the new “strategic partnership” deal: Canada will reduce tariffs on up to 49,000 Chinese electric vehicles from 100% to 6.1%, China will lower tariffs on Canadian canola seed from 85% to 15% by March, and Canada is committed to increasing exports to China by 50% before 2030. At first glance, the agreement seems to be a complete one-eighty from Carney: just last April, he deemed China as Canada’s “biggest security threat.” However, Carney’s sudden, aspirational stance on China isn’t the result of a drastic change of heart, but rather a pursuit of security and consistency in response to unpredictable U.S. economic policy.
Since taking office in January 2025, President Donald Trump has redefined U.S. international policy by withdrawing the country from 66 international organizations and agreements, including the World Health Organization, UNESCO, and the 2015 Paris climate agreement. Likewise, President Trump has signed over 40 executive orders, instituting universal and sector-specific tariffs, such as a 10% global baseline tariff and a 50% tariff on steel and aluminum products. However, the shelf life of these tariffs remains uncertain. For example, tariffs on general goods from Canada rose from 25% in March 2025 to 35% by August. According to a White House-issued fact sheet, the decision was made after Canada “failed to cooperate in curbing the ongoing flood of fentanyl and other illicit drugs.” To add some perspective to the magnitude of this “flood,” fentanyl seizures along the U.S.-Canada border made up just 2% of total border seizures in 2024.
Over the past year, U.S. tariffs have generated over $250 billion (a 197% increase from 2024), with the average effective tariff rate reaching its highest over the last century (spiking from 2.64% in January 2025 to 27% by April) and the U.S. trade deficit reaching its lowest since 2009 in October. On the other hand, by insisting on zero-sum economic policy, President Trump runs the risk of straining foreign relationships, and the consequences are beginning to come to fruition. In his statement at Davos, Carney indirectly called out the U.S. for its aggressive and egoistic policies: “Call it what it is—a system of intensifying great power rivalry, where the most powerful pursue their interests, using economic integration as coercion.” Confronted with this mounting pressure, Carney claims that “allies will diversify to hedge against uncertainty.” Canada and others will “buy insurance” to remain “anchored in the ability to withstand pressure.” Unfortunately for the U.S., it appears Canada plans to find their “insurance” by turning to China.
According to a memo issued by Carney’s office while the Prime Minister was still in Beijing, China presents “enormous opportunities for Canada” to diversify its trade partnerships. While certain elements of Chinese policymaking such as the nation’s “Five-Year Plan” (a strict outline of social, global, and economic trajectories) may provide some level of consistency, it would be remiss to assume that China’s international economic ambitions are any less aggressive than those of the U.S. Whether illicitly evading sanctions by smuggling Iranian oil in unmarked “shadow tanker fleets,” or taking advantage of smaller nations through debt-trap diplomacy hidden beneath the guise of their “developmental” Belt and Road Initiative, China’s foreign economic strategies are marred with corrupt, subterranean motives. By pursuing future economic relations with China despite the nation’s tainted history of aggressive foreign policy, the Canadian government demonstrates the extent to which it will go to safeguard against the uncertainty current U.S. foreign policy presents. To further complicate the matter, President Trump declared on January 24 that if a trade deal was reached, the U.S. would impose a 100% tariff on all Canadian goods. However, in response to the President’s threat, Carney reassured that Canada had “no intentions” of pursuing a free trade agreement with China, remaining in conjunction with the U.S.-Mexico-Canada trade agreement (USMCA) classification of China as a “non-market” economy. Therefore, economic doomsday in the Western Hemisphere may not be here just yet. Regardless, as the U.S. continues to pursue austere, isolationist policies, economic priorities must be balanced with the preservation of global relationships to prevent sporadic foreign policy decisions from alienating allies and opening the door for rival powers.
