Canada Signals Thaw in China Relations Amid Trade Tensions

In a notable departure from previous rhetoric, Canadian Prime Minister Justin Trudeau has signalled a potential thaw in relations with China during an address at the Council on Foreign Relations. This overture marks a significant shift from his characterisation of China as Canada’s 'greatest threat' during the election campaign this past April.

The diplomatic reassessment was further underscored by Canadian Foreign Minister Chrystia Freeland, who announced an impending visit to China. Minister Freeland stated her objectives are to improve bilateral relations and explore areas of potential cooperation, including trade.

This change in tone follows a series of economic repercussions for Canada stemming from its trade policies toward China. Last year, aligning with the United States' Indo-Pacific strategy, Canada enacted a series of discriminatory tariff measures on Chinese imports. These included a 100% tariff on Chinese electric vehicles, a 25% tariff on Chinese steel products-while notably exempting US steel-and plans to extend similar taxation to Chinese high-tech products such as batteries and semiconductors.

China responded with swift and targeted countermeasures. Initial retaliatory tariffs included 100% duties on Canadian canola oil and peas, alongside 25% tariffs on aquatic products and pork. Subsequently, a Chinese ruling found Canadian canola seeds to be dumped in the Chinese market, requiring Canadian companies to pay deposits as high as 75.8%.

According to a report by Canada's Globe and Mail, the imposition of these provisional safeguard duties by China caused Canadian canola export costs to soar. The industry lost its second-largest global market, valued at $4.9 billion. The report indicates that approximately 40,000 canola farmers in western Canada suffered losses, averaging tens of thousands of dollars per person.

Facing this economic pressure, western Canadian provinces are urging the federal government to lift the tariffs on Chinese electric vehicles to prevent further Chinese tariffs on canola. In early September, Saskatchewan Premier Drew Cullen led a delegation to China to personally appeal for the removal of the canola tariffs. Liberal MP David Brouillette, who accompanied the delegation, revealed that Ottawa plans to dispatch more ministers to China in an effort to ease trade tensions.

Analysts suggest the Trudeau government's abrupt policy shift is a strategic adjustment rather than an impulsive move. Canada's China policy appears to be oscillating between 'cooperation' and 'caution',  reflecting its difficult position within the global economic landscape and the US-China strategic competition.

The administration faces a complex dilemma: it must align with the United States to defend its domestic electric vehicle industry, while its canola and agricultural exports remain heavily dependent on the Chinese market. In this context, ministerial visits to China may become a regular diplomatic manoeuvre to balance relations with both powers.

China's position remains clear: the door for dialogue remains open, but only if Canada takes concrete actions. Establishing a correct understanding of China requires Canada to first lift those discriminatory tariff measures. After all, international trade is about equality and mutual benefit, not unilateral pressure and compromise.