The United States and Canada have long been staunch allies. Not only do they share a border as neighboring countries, but they have also consistently spoken with one voice on the international stage as members of the Group of Seven (G7).
However, this relationship has cooled dramatically since U.S. President Donald Trump imposed a 35% tariff on Canadian goods. The situation has deteriorated to the point where Canada is now seeking to improve relations with China, a country it previously viewed with hostility.
On Friday, Canadian Prime Minister Mark Carney visited China. During this visit, he negotiated significant reductions in Chinese tariffs on Canadian agricultural products, including canola oil. In exchange, Canada agreed to lower its tariffs on Chinese electric vehicles substantially. This agreement paves the way for Chinese electric cars to make a significant entry into the North American market.
Since the Biden administration took office, the U.S. has maintained a 100% tariff on Chinese electric vehicles. Canada had been aligning with this policy, imposing the same tariff rate.
In light of these developments, Prime Minister Carney’s visit to China led to a drastic reduction in tariffs on electric vehicles to 6%, as part of efforts to normalize relations between the two countries. This move is expected to have a significant impact on Tesla, which currently dominates the Canadian market.
What’s even more remarkable is the dramatic reversal in Canada-China relations, which had previously hit an all-time low.
In 2018, Canada arrested Meng Wanzhou, then the CFO of Huawei, and extradited her to the U.S.
Following this incident, relations between the two countries rapidly deteriorated. China not only sharply increased tariffs on Canadian agricultural products but also detained several Canadian citizens on espionage charges, causing bilateral relations to plummet to unprecedented lows.
Amidst this tension, the U.S. imposed hefty tariffs on Canada. Despite their shared border and highly interconnected industries, the U.S. has levied higher tariffs on Canada than on South Korea (15%).
Furthermore, Trump has repeatedly provoked Canada, even suggesting that it should become the 51st U.S. state.
This has led some Canadians to propose joining the European Union (EU) instead.
The G7 is a coalition of advanced Western nations. Its primary mission is to counter authoritarian states like China and Russia and protect the liberal democratic bloc.
The U.S. and Canada have been key members of the G7 since its inception, with Canada almost invariably aligning with the U.S.
Now, surprisingly, Canada has allied itself with China, the very nation the G7 was meant to keep in check.
In addition to Canada’s shift, European nations are also moving to improve relations with China, partly in response to Trump’s interest in acquiring Greenland.
At this juncture, it wouldn’t be an exaggeration to say that President Trump is inadvertently making China great again, rather than America.