Other BriefingsCarney’s Canada: What’s Next for China-Canada Trade and Investment?
Mark Carney’s election as Prime Minister of Canada may herald a shift in China-Canada relations. His pro-trade stance and track record of engaging with China could pave the way for stronger ties, particularly as tensions with the US escalate. Trump’s confrontational approach toward Canada may further motivate closer trade and business links with China. However, significant challenges persist, with both nations needing to resolve existing disputes. Even so, his election could provide the platform to create new China-Canada business opportunities in fields such as clean energy, agriculture, and energy trade.
On March 9, 2025, Mark Carney became the leader of Canada’s ruling Liberal Party and assumed the role of Prime Minister following Justin Trudeau’s resignation in early January. Shortly after taking office, he called a snap election, which he won on April 28, securing a fourth consecutive victory for the Liberals.
Running on a staunchly anti-Trump platform, Carney capitalized on the discontent caused by the US president’s tariffs and antagonistic rhetoric toward Canada, issues that have strained the bilateral relationship and disrupted North American economic integration.
His victory thus signals a rejection of economic nationalism and protectionism in favor of cooperative globalism. Carney’s extensive international experience, including his leadership at the Bank of Canada, Bank of England, and in global climate finance, positions him as a continuity leader who champions predictable, rules-based trade. These are values that align well with China’s long-term interests in sustaining access to Western markets, participating in global governance, and promoting green finance. His leadership, in particular when juxtaposed to that of Trump, may thus foster a conducive environment for deepening China-Canada trade ties, reducing geopolitical tensions, and facilitating collaboration on climate and development initiatives.
Nonetheless, Carney has in the past expressed skepticism toward China, and the strained relations between China and Canada left by his predecessor, Justin Trudeau, cannot instantly be shaken off. There also remain unresolved trade disputes between China and Canada that Carney will have to navigate, posing ongoing challenges for companies seeking to conduct business in both countries.
This article explores the potential areas of cooperation between China and Canada under Carney’s leadership while also examining the challenges he faces amidst ongoing trade disputes and strained relations with the US.
Carney’s China position
Carney did not set out a comprehensive China policy during his election campaign, but his extensive history with China through his roles as Governor of the Bank of Canada, Governor of the Bank of England, and Chair of the Financial Stability Board suggests a pragmatic, business-oriented approach. He has engaged in high-level diplomacy with China on several occasions, including multiple meetings with President Xi Jinping, most recently in March 2024 as Chair of Bloomberg’s Board of Directors. His past interactions, largely within the framework of global finance and policy, reflect a consistent advocacy for economic engagement, particularly in business, investment, and climate collaboration.
As Governor of the Bank of Canada, Carney encouraged Canadian firms to tap into China’s growing middle class. In 2017, he helped secure trade and energy cooperation deals during a visit to China with UK officials. He has also been critical of isolationist trade policies, warning in 2019 that Trump’s trade war with China could “shipwreck” the global economy. In a March 2024 interview with China’s 21st Century Business Herald, he urged deeper climate and clean tech cooperation with China while commending Beijing’s progress on market access.
Nonetheless, Carney has shown he may succumb to domestic pressure to adopt a tougher stance on China. During an election campaign debate, he said that China was Canada’s biggest security threat. Moreover, despite his past support for engagement, his economic plan identifies China as a national security concern, citing its ambitions in tech and AI, signaling alignment with US geopolitical priorities.
Opportunities for China-Canada trade under Carney
Carney’s strategy to mitigate the impact of US tariffs centers on reducing internal trade barriers, but resolving disputes with China could open additional economic opportunities. His core economic goal is to “grow the strongest economy in the G7” by reducing Canada’s overreliance on the US and diversifying trade with “like-minded countries.” While China may not fit that exact description, as professor emeritus at the University of British Columbia Paul Evans pointed out to the South China Morning Post (SCMP), following his win, Carney softened this wording, saying that Canada was seeking “reliable” partners in Asia.
While Carney faces some pressure within the country to be tough on China, the deteriorating US-Canada relations may push the country to closer ties with China. Since early March, the US has imposed a 25 percent tariff on Canadian goods, a 10 percent tariff on Canadian energy resources, and a 25 percent tariff on Canadian steel and aluminum entering the US. Per the latest official trade data, these duties have already begun to impact trade between the two countries. In March, Canadian exports to the US fell by 6.6 percent from the previous month. However, this drop was “almost entirely offset by a strong increase in exports to countries other than the United States”, with exports increasing by 24.8 percent from February.
China is Canada’s second-largest trade partner after the US (although by a wide margin, the US accounting for 75.9 percent of exports to China’s 4.1 percent in 2024). In 2024, bilateral trade expanded to US$93 billion. Of this, China exported US$46.4 billion worth of goods to Canada, up 2.9 percent from the previous year. Meanwhile, China imported US$46.6 billion in goods from Canada in 2024, up 6.1 percent from 2023.
While China provides a possible market to offset the damage caused by the US tariffs, it does not yet appear to have filled this void. In the first quarter of 2025, bilateral trade between China and Canada fell 2 percent year-on-year to US$22.3 billion, according to data from the Huaon Industrial Research Institute. Of this, the total value of China’s imports from Canada was US$11.36 billion, a decrease a decrease of 5.9 percent from the same period last year. China’s exports to Canada, however, rose by 2.4 percent from the same period in 2024 to US$10.95 billion.
Nonetheless, Carney has consistently acknowledged the important role that China plays in Canada’s economy, and reducing reliance on the US market will be an inevitable outcome of the global trade war instigated by the Trump administration. While it remains possible that the US and Canada will come to a deal to greatly reduce or remove the tariffs, the erosion of trust and instability caused by the trade war means Canadian exporters will continue to seek to diversify their export markets, leaving a space open for China to develop relations. In a speech following his election win, Carney said that “Our old relationship with the United States, a relationship based on steadily increasing integration, is over” and added that Canada has “many, many other options than the United States to build prosperity for all Canadians”. This opens the door for improved trade relations between Canada and China, particularly in energy and agriculture.
However, there are trade tensions between China and Canada to overcome: in October 2024, Canada imposed 100 percent tariffs on Chinese electric vehicles and 25 percent tariffs on Chinese steel and aluminum, mirroring US trade actions. In response, China announced retaliatory tariffs in March 2025, including a 100 percent tariff on Canadian canola oil, oil cakes, and peas, and a 25 percent tariff on seafood and pork. Additionally, China’s anti-dumping investigation into Canadian rapeseeds remains unresolved, and its 2021 ban on Canadian beef is still in effect.
China has indicated that it is willing to negotiate on the current trade disputes and work with Canada to counter the US’s economic actions. Speaking to The Canadian Press, the Chinese Ambassador to Canada Wang Di said that “China is Canada’s opportunity, not Canada’s threat”. The ambassador reportedly also said that China would be willing to drop the tariffs on Canadian goods if Canada acted in kind.
Potential areas of cooperation under Carney
Clean energy technology and climate change
Climate change and clean technology represent significant areas of potential cooperation between Canada and China under Carney’s leadership, particularly given his reputation as a global authority on sustainable finance. As former UN Special Envoy on Climate Change and an advocate for green investment, Carney has consistently emphasized the importance of aligning financial systems with climate goals. In this context, Canada and China could work together on expanding carbon markets, developing emissions trading systems, and financing clean energy infrastructure, especially in the developing world. Both countries could also contribute to establishing stronger ESG standards and unlocking private-sector capital for sustainability initiatives.
To support green growth, Canada and China can also enhance cooperation in critical minerals and clean tech supply chains. Canada and China have synergic capabilities, with Canada holding vast reserves of essential minerals such as lithium, cobalt, and nickel, while China leading in processing and refining. Joint ventures in battery production, co-investment in clean technology innovation, and coordinated efforts to diversify global supply chains could not only advance mutual climate goals but also reduce dependence on third-party markets.
Energy
Energy trade, particularly in liquefied natural gas (LNG), presents a compelling avenue for deeper cooperation between Canada and China, especially as global energy markets shift in response to geopolitical tensions and climate commitments. Canada is rapidly scaling up its LNG export capacity, and China, as one of the world’s largest LNG importers, is emerging as a natural long-term partner. In 2024, China imported over 131 million metric tons of natural gas, but direct imports from Canada have remained minimal due to the lack of infrastructure to serve the Asian markets.
One of the most significant developments that could change this dynamic is the construction of export facilities on Canada’s west coast. Major projects include the Shell-backed LNG Canada and the proposed Cedar LNG project, both in Kitimat, British Columbia, which are expected to begin production by mid-2025 and 2028, respectively. China’s state-owned energy giant Sinopec is reportedly in negotiations for an offtake agreement and equity stake with Cedar LNG, indicating China’s keen interest in investing in Canadian LNG. Once both facilities are operational, Canada will be strategically positioned to supply LNG directly to China, providing a significantly faster shipping route than facilities on the US Gulf Coast and other West Coast terminals.
This logistical advantage becomes even more strategic in light of rising trade frictions between Canada and the US. In 2023, the US imported about 60 million metric tons of LNG from Canada, accounting for almost all of its natural gas imports. However, the Trump administration’s 10 percent tariff on Canadian energy imports, combined with the push for greater LNG production in the US, threatens to weaken Canadian access to its largest energy market. These developments create both an urgency and an opportunity for Canada to diversify its export destinations, with China emerging as the most viable alternative.
For China, increasing LNG imports from Canada aligns with its broader energy security strategy. Diversifying sources reduces its dependence on other major suppliers like the US, Russia, and Qatar, while also enhancing bilateral ties with a resource-rich G7 country. Long-term LNG supply agreements could offer price stability and mutual strategic benefits. Beyond trade, infrastructure partnerships could further deepen energy cooperation. There is also scope for joint research and innovation in decarbonizing fossil fuel supply chains, an area where Carney’s background in sustainable finance and China’s growing clean energy expertise could intersect productively.
Agriculture and food security
Agriculture and food security remain key areas of potential cooperation between Canada and China, even amid the current trade tensions. China has long been a major importer of Canadian agricultural products, including cereals, seafood, and meat, and this trade relationship has proven resilient in the face of shifting geopolitical dynamics. A combination of recent tariffs and falling domestic demand has impacted Canada’s agricultural exports to China. From 2023 to 2024, China’s imports of Canadian oil seeds, cereals, and seafood fell by 12.8 percent, per data from ITC Trade Map.
Nonetheless, as China’s middle class continues to grow, so does its demand for high-quality, safe, and traceable food imports. Canada, with its strong regulatory frameworks and reputation for premium agricultural standards, is well-positioned to meet this demand. There is significant potential for expanding exports of products such as wheat, canola, seafood, pork, and beef, especially if ongoing issues like the 2021 ban on Canadian beef and the anti-dumping investigation into rapeseeds can be diplomatically resolved.
Carney may view China’s appetite for premium food imports as a pragmatic opportunity to support Canadian farmers and agribusinesses. Philippe Rheault of the University of Alberta’s China Institute also noted to the SCMP that China’s current tariffs target Canada’s more conservative provinces, meaning that conservative ministers who are typically more China-skeptic may be more easily swayed to strike a deal with China if it means improving conditions for farmers within their jurisdictions.
Beyond trade, there is also room for bilateral collaboration on longer-term food security and sustainability. As both countries confront the effects of climate change on agriculture, joint efforts in agricultural innovation, climate-resilient crops, and sustainable farming practices could strengthen resilience on both sides. Such cooperation could be facilitated through research exchanges, public-private partnerships, and engagement in multilateral platforms focused on global food security.
China’s Catalog of Industries Encouraged for Foreign Investment underscores areas where Canada’s agricultural sector could align with Chinese priorities. The catalog promotes foreign investment in smart agriculture, such as the integration of software technology in agricultural production, as well as the development of cold chain logistics for agricultural storage and preservation. Additionally, China seeks investment in breeding technology for livestock, poultry, and aquatic seedlings, as well as standardized scale breeding techniques – areas where Canadian expertise and advanced agricultural practices could be effectively leveraged.
Challenges to growing China-Canada cooperation
While Carney’s leadership presents opportunities for stronger China-Canada relations, there are still considerable challenges to be overcome. The most immediate obstacle is the ongoing tariff dispute, which has not only disrupted bilateral trade flows but also heightened political sensitivities, complicating any potential efforts to negotiate new agreements or resolve existing conflicts.
Domestic political pressures further complicate the landscape. Within Canada, there is substantial skepticism toward closer economic ties with China, particularly among conservative politicians who attempted to use Carney’s past relations with China against him during the election campaign. While he has previously advocated for economic engagement with China, he may now face pressure to adopt a more cautious or even confrontational stance to align with public sentiment and maintain political capital.
Certain fields will continue to be sensitive, as Canada has labeled China as a national security concern in key economic areas such as artificial intelligence and advanced technologies. Balancing economic cooperation with national security considerations will require careful diplomatic navigation to avoid potential domestic backlash, while being too aggressive risks further antagonizing China.
Finally, the US-China rivalry may continue to exert considerable pressure on Canada. Although Carney is seeking to reduce Canada’s economic reliance on the US, the reality remains that the US is still Canada’s largest and most influential trade partner. Given the longstanding economic and security ties between the two countries, Carney is likely to prioritize stabilizing relations with Washington. This could result in the US pressuring Canada to avoid deepening ties with Beijing, particularly in sensitive areas such as technology, critical minerals, and advanced manufacturing.
Despite these challenges, if Carney can effectively navigate the complex geopolitical landscape and resolve ongoing trade disputes, there remains substantial potential for Canada to leverage its strengths to build more stable and mutually beneficial economic ties with China.
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