Well, that was fast. After just a couple of days in China, Mark Carney is walking away with a new trade deal — and already facing some political blowback at home.
What happened: The agreement, announced after Carney met with Chinese leader Xi Jinping, will see Canada allow 49,000 Chinese electric vehicles to be imported at a tariff rate of 6%. Any EVs imported above that quota would face the current 100% tariff level.
On the other side of the ledger, China will lower its tariffs on Canadian canola seed from 84% to approximately 15% and drop duties on canola meal, lobsters, crabs, and peas by March 1st. Canadians will also be able to travel to China without a visa.
Why it matters: The decision to allow any Chinese EVs into the Canadian market is controversial, and already setting off an intense debate about the future of Canada’s auto sector.
The import cap of 49,000 is relatively small — just 3% of Canada’s car market — but for some, even one car imported from China is too many. Ontario Premier Doug Ford called the deal “terrible,” arguing it gave China a “foothold” in the market that they would use to destroy the auto industry.
Meanwhile, Saskatchewan Premier Scott Moe called the deal “very good news for Canada and Saskatchewan,” while Carney said it would strengthen Canada’s auto sector by attracting Chinese investment.
And what about the elephant in the room? Surprisingly, Donald Trump (at least for now) sounded positively chill about the whole thing. “That’s OK, that’s what he should be doing,” Trump responded when asked about the agreement. “It’s a good thing for him to sign a trade deal. If you can get a deal with China you should do that.”
Of course, CUSMA negotiations are expected to begin as early as next week, and Trump could change his tune on this by then (or even by the time you’re reading this).
Our take: Carney’s goal of doubling non-U.S. trade in the next 10 years was almost universally popular when considered in a vacuum, but now that the rubber is hitting the road, it’s going to prove more controversial. There’s a diverse set of regional, economic, and political interests in play, and pleasing them all will not be possible. The question is, can the prime minister keep enough people happy for long enough to execute his pivot?—TS