Carney says Canada not pursuing free trade deal with China as Trump threatens 100% tariffs
Canadian Prime Minister Mark Carney after his speech in Quebec City, Quebec, Canada, on Thursday, January 22, 2026.
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Prime Minister Mark Carney says Canada has no intention of entering into a free trade agreement with China after US President Donald Trump threatened to impose punitive tariffs on Ottawa.
Speaking to reporters on Sunday Carney said the country respects obligations under the Canada-U.S.-Mexico trade agreement, known as CUSMA in Canada and USMCA in the United States, and will not enter into a free trade agreement without notifying the other two parties.
Carney’s remarks came after Trump threatened to impose 100% tariffs on Canadian exports if Ottawa “makes a deal” with Beijing.
“If Governor Carney thinks he is going to turn Canada into a ‘Drop Port’ for China to ship goods and products to the United States, he is sorely mistaken.” Trump posted on Truth Social Saturday.
The remarks come against a backdrop of rising tensions between the United States and Canada, with Trump withdrawing his invitation to attend the “Peace Board” in Ottawa last week after Carney warned against economic pressure from the world’s superpowers in a speech at the World Economic Forum in Davos.
While Carney did not name any countries, Trump said on the sidelines of the WEF: “Canada is alive because of the USA. Remember that next time you make a statement, Mark.”
Trump’s fiery rhetoric about Truth Social contrasts with what he said after the deal between Ottawa and Beijing earlier this month: “That’s what he’s doing.” [Carney] He must be doing it. It’s a good thing for him to sign a trade deal. “If you can reach an agreement with China, you should do it.”
Treasury Secretary Scott Bessent echoed Trump’s thoughts about Canada and China: I’m telling ABC News on Sunday that the US “cannot allow Canada to become an opening for the Chinese to dump their cheap goods into the US”
On January 16, Ottawa and Beijing signed a “preliminary agreement” under which both sides lowered tariffs on certain goods.
Within the scope of the agreement, Canada will allow 49,000 Chinese electric vehicles to enter the market annually at a reduced tariff rate of 6.1% after, along with the United States, increasing tariffs on such vehicles to 100% in October 2024.
In response, Beijing will reduce duties on Canadian agricultural exports, including canola seed oil, dropping tariffs to 15% starting March 1 from the current 85%.
Other exports, such as Canadian canola meal, lobster, crab and peas, will also not be subject to China’s anti-discrimination tariffs until at least the end of 2026.
“What we are doing with China is correcting some of the issues that have developed over the last few years,” Carney said on Sunday, adding that the agreement was “entirely consistent with CUSMA.”
In August 2025, Trump increased tariffs on Canadian goods from 25% to 35%. Under CUSMA, most Canadian exports are duty-free, but some goods, including steel, copper, and certain automobiles and auto parts, are subject to U.S. tariffs.
— CNBC’s Terri Cullen contributed to this report.
