Trump threatens tariffs over Canada China ties

US President Donald Trump has warned Canada that it could face punitive trade measures if it deepens economic ties with China, escalating tensions between two closely integrated North American economies. The threat highlights the growing use of tariffs as leverage in geopolitical disputes and adds fresh uncertainty to global trade at the start of 2026.

In a social media post, Trump said Canada would be hit with a 100% tariff on all goods entering the United States if it struck a trade deal with Beijing. He argued that Ottawa could not be allowed to act as a conduit for Chinese products entering the US market. While Trump did not specify which agreement prompted the warning, it followed Canada’s recent announcement of a strategic partnership with China that included selective tariff reductions after years of strained relations.

The remarks come against a backdrop of deteriorating political rhetoric. Canadian Prime Minister Mark Carney recently said the US-led global order had been ruptured, urging so-called middle powers to cooperate more closely in the face of economic coercion by larger states. Trump responded by questioning Canada’s economic independence and later withdrew an invitation for Ottawa to participate in a new US diplomatic initiative, underscoring the personal and political dimension of the dispute.

Canadian officials have sought to downplay the confrontation. Canada’s trade minister said there was no pursuit of a free trade agreement with China, stressing that recent talks focused on resolving specific tariff issues. Ottawa has nevertheless been open about its desire to diversify trade away from the US, which remains Canada’s largest export market, particularly after years of unpredictable tariff threats from Washington.

The agreement with China includes a sharp reduction in Chinese tariffs on Canadian canola oil, while Canada lowered duties on Chinese electric vehicles to a standard rate. The move was widely seen as a breakthrough and could support Canadian exporters and attract Chinese investment, but it risks triggering retaliation from the US.

For businesses and investors, the threat of blanket tariffs is significant. A 100% duty would severely disrupt deeply integrated supply chains spanning manufacturing, agriculture and energy, raising costs and deterring investment. More broadly, the episode illustrates how trade policy is increasingly shaped by strategic rivalry, leaving economies exposed to abrupt political shocks.

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