Eric Ham is based in Washington, D.C. and is a political analyst for CTV News. He’s a bestselling author and former congressional staffer in the U.S. Congress and writes for CTVNews.ca.
What a difference a year makes.
A look back to 2024 and Prime Minister Mark Carney referred to China as “the biggest security threat” facing Canada. Fast-forward to 2026 and Ottawa is now hailing a new trade deal cemented with Beijing.
In that same year, Canada was joined at the hip with its biggest trading partner, the United States. The allied nations were levying tariffs on Chinese electric vehicles, accusing Beijing of flooding the market and undermining other nations’ ability to compete.
Fast forward and the prime minister is singing a completely different tune. Gone are the days of the two neighbours collaborating to break China’s stranglehold in the automotive sector. Now, Carney is proclaiming Canada’s relationship with China is “more predictable” than its relationship with the U.S. under the Trump administration.
Moreover, Ottawa is “recalibrating” its relationship with China, “strategically, pragmatically, and decisively.” Welcome news perhaps to Canadians outside Ontario’s lucrative automotive sector, yet the reviews inside the Trump administration are decidedly mixed and could impact future negotiations surrounding CUSMA.
Trump’s mixed signals
Prior to the announcement of the breakthrough trade pact between Carney and Prime Minister Xi Jinping, President Trump offered his most stinging assessment to date of the trade relations between the U.S. and Canada.
Speaking at an automotive plant in Michigan, he flatly stated the U.S. “doesn’t need anything from Canada,” and called CUSMA “irrelevant.” However, in the wake of renewed bilateral ties between Canada and China, the president was less hostile and much more sanguine.
Calling the agreement “a good thing” Trump went on to say: “If you can get a deal with China, you should do that,” while speaking to reporters outside the White House. However, not everyone inside the Trump administration is as euphoric of the deal as worries grow from other officials.U.S. Transportation Secretary Sean Duffy said he thought Canada would look back at this deal and regret bringing Chinese cars into the market.
Moreover, U.S. Trade Representative Jamieson Greer was equally critical of the deal, adding, “There’s a reason why we don’t sell a lot of Chinese cars in the United States. It’s because we have tariffs to protect American auto workers and Americans from those vehicles.”
More ominously, U.S. Ambassador to Canada Pete Hoekstra pointedly warned about China’s role in North American trade. He said that while Canada can pursue trade with Beijing as a sovereign country, the U.S. could respond if Chinese-made products enter North America through Canada.
“If you’re allowing EVs and other vehicles to come in from China,” said Hoekstra, “don’t necessarily expect that the U.S. border is going to be porous.”President Trump appears (for now) unfazed by the agreement, but others within the White House clearly see red flags. There is growing concern that Prime Minister Carney is aggressively attempting to build leverage which to use in forthcoming negotiations on CUSMA.
CUSMA leverage or liability?
Mexico’s Claudia Sheinbaum and Carney both have expressed their desire to see the regional trade pact remain in place. However, with the White House continuously signalling its intentions to walk away, Canada is walking a fine line preparing for that very possibility. Yet at the same time, Ottawa’s leaders are also painstakingly trying not to cross any red lines that might alarm President Trump, forcing a premature exit from CUSMA.
In fact, many experts believe the key component of the newly minted trade agreement — Chinese electric vehicles, capped at 49,000 vehicles or just three percent of the total Canadian market — could be a trigger for some inside the Trump Administration. The concern being China’s EVs could exponentially grow, providing stiff competition to U.S. automakers.
However, there are some experts that believe Carney would not have agreed to a deal without a back channel agreement from Washington. Karl Schamotta, chief market strategist at the financial services firm Corpay, says: “It is possible that this agreement was approved through back channels with the administration, meaning that — other than issuing a few obligatory hostile statements — U.S. officials simply ignore this development.”
Nevertheless, the mixed reaction from the Trump administration could make it difficult for Carney and his coterie of advisers to gauge next steps when preparing for CUSMA negotiations and beyond.
Former Obama administration official DeWardric McNeal says: “Carney is not confrontational but strategic for Canada.” He goes on to state the PM is engaged in what he thinks is “good economic statecraft for Canada, all the while recognizing that the White House national security strategy also impacts Canada as much as Latin America, and Carney is acutely aware of that and making moves accordingly.”
Still, it is not lost that while those moves might be in the best interest of Canada, Washington, or at least some key voices inside the Trump Administration, believe those very moves undermine strategic U.S. interests.
For now, the president has not signalled a call to arms in light of the growing closeness between Carney and Xi, but given the mercurial nature of this president, anything is possible.
