Mark Carney, Prime Minister of Canada, announced on January 25, 2026, that Canada will not pursue a free trade agreement with China amid U.S. tariff concerns.
Carney’s statement underscores trade diversification efforts without full free trade with China, aiming to boost targeted sectors by 2030 while adhering to USMCA commitments.
Canada’s Mark Carney affirms no China free trade deal amid U.S. tariffs looming. Limited tariff cuts planned.
Canada Halts China Free Trade Talks Amid U.S. Tariff Threats
On January 25, 2026, Canadian Prime Minister Mark Carney confirmed that Canada will not pursue a free trade agreement with China. This announcement was made amid U.S. tariff threats, clarifying previous negotiations only included limited tariff rollbacks. Carney stated, “Canada is building a stronger, more independent, and more resilient economy through targeted trade diversification, not free trade.”
In the recent agreement-in-principle, both nations agreed to roll back tariffs in specific sectors such as EVs, steel, and canola. Carney emphasized that Canada aims to build a more independent economy through strategic trade decisions, excluding the prospect of a free trade agreement.
Canada Aims for $6.6 Billion Export Boost Despite No Deal
The focus on tariff rollbacks could enhance specific Canadian export sectors, reducing canola tariffs to around 15% by March 2026. The lack of a free trade deal, however, suggests a cautious approach among Canadian policymakers in expanding trade ties with China extensively.
Potential financial impacts include a $6.6 billion boost in Canadian exports to China, targeting clean energy and agri-food improvements. The steel and aluminum sectors are also expected to see extended duty remissions until the end of 2026, aligning with past trends.
Trade History Restricts Canada-China Agreement Options
Historically, trade frictions between Canada and China, particularly in 2023-2024, led to increased tariffs on commodities such as canola. Current agreements mirror past levels pre-tension, as Canada’s trade policies complement existing USMCA regulations that limit free trade with non-market economies.
Experts note that these trade measures have strategic significance due to historical trends of prioritizing United States-Canada economic ties. With estimated goals to increase exports by 50% by 2030, Canada’s trade strategies aim for long-term gains while maintaining economic independence.
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