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Canada has abruptly pulled back from pursuing a free trade agreement with China after President Donald Trump warned Prime Minister Mark Carney that Ottawa would face crushing 100 percent tariffs if it moved closer to Beijing.

Speaking to reporters on Sunday, Carney stated that Canada has “no intention” of pursuing a free trade deal with China and emphasized that Ottawa remains bound by its obligations under the United States–Mexico–Canada Agreement (USMCA), known in Canada as CUSMA.

The reversal follows Trump’s blunt warning on Truth Social that Canada would not be allowed to function as a transshipment hub for Chinese goods entering the U.S. market.

“If Governor Carney thinks he is going to make Canada a ‘Drop Off Port’ for China to send goods and products into the United States, he is sorely mistaken,” Trump wrote. “If Canada makes a deal with China, it will immediately be hit with a 100% Tariff.”

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The China Agreement That Triggered Washington

On January 16, Ottawa and China announced a preliminary trade arrangement lowering tariffs on select goods. Under the deal, Canada agreed to allow up to 49,000 Chinese electric vehicles annually at a reduced tariff rate of 6.1 percent—down sharply after Ottawa had raised EV tariffs to 100 percent in October 2024 in coordination with Washington.

In return, Beijing agreed to reduce tariffs on Canadian agricultural exports, including canola oil, with duties scheduled to drop from 85 percent to 15 percent beginning March 1. Other exports such as canola meal, lobsters, crabs, and peas were granted tariff relief through at least the end of 2026.

Carney defended the arrangement as a limited corrective measure, saying, “What we have done with China is to rectify some issues that have developed in the last couple of years,” adding that the agreement was “entirely consistent with CUSMA.”

Washington clearly disagreed.

Trump Draws a Hard Line

The Trump administration’s position reflects a broader effort to shut down any pathway allowing Chinese goods to bypass U.S. trade restrictions through allied economies.

Treasury Secretary Scott Bessent reinforced the warning in a Sunday interview, stating the United States cannot “let Canada become an opening that the Chinese pour their cheap goods into the U.S.”

Trump’s stance also follows rising tensions between Washington and Ottawa after Carney criticized “economic coercion by superpowers” during remarks at the World Economic Forum in Davos—comments Trump interpreted as a direct rebuke of U.S. trade policy.

“Canada lives because of the United States,” Trump said on the sidelines of Davos. “Remember that, Mark, the next time you make your statements.”

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Economic Pressure Already Mounting

In August 2025, the Trump administration raised tariffs on certain Canadian goods to 35 percent, up from 25 percent. While most Canadian exports remain tariff-free under USMCA, steel, copper, and certain autos and auto parts have already been targeted.

A full 100 percent tariff threat would represent an economic shock Canada cannot absorb—especially as its economy remains deeply integrated with U.S. supply chains.

Carney’s rapid retreat underscores that reality.

Strategic Implications

This episode highlights a central feature of Trump’s second-term foreign policy: economic leverage as a tool of sovereignty enforcement. Rather than multilateral consensus, the administration is using market access as a strategic weapon to isolate China and force alignment among U.S. trading partners.

For Canada, the message was unmistakable. Trade diversification is permitted—until it threatens U.S. economic security.

Prophetic Context

Scripture repeatedly warns of nations entangled in commerce losing their independence.

“The merchants of the earth have become rich by the wealth of her sensuality.” (Revelation 18:3)

Economic dependency is never neutral. It is leverage—often invisible until it is enforced.

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Conclusion

Canada’s retreat from deeper trade engagement with China was not voluntary diplomacy—it was compelled by reality. Faced with the prospect of devastating tariffs and economic isolation, Ottawa chose alignment over defiance.

Trump’s warning worked.

And it sends a clear signal to other U.S. allies considering closer ties with Beijing: access to the American market comes with conditions—and those conditions are no longer negotiable.

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