Trump's erratic trade policies are pushing US partners towards China
Key US trade partners are responding to President Donald Trump’s often belligerent and unpredictable policies by looking to take their business elsewhere. Canada's decision on Friday to cut tariffs on Chinese electric vehicles is the latest example of how Trump's erratic trade policies are pushing allies into the arms of America's greatest economic rival.
Issued on: 17/01/2026
By: FRANCE 24
China sees record $1.19 trillion trade surplus in 2025 in spite of US tariffs
China's record surplus
The European Union is expected to formally sign a trade pact Saturday with the South American alliance known as Mercosur, which includes the region’s two biggest economies, Brazil and Argentina. The EU is also pursuing a trade deal with India.
China, pounded by US tariffs since Trump’s first term, has also diversified its exports away from the world’s biggest economy to markets such as Europe and Southeast Asia.
It seems to be working. China’s trade surplus with the rest of the world surged to a record $1.2 trillion in 2025, the Chinese government reported Wednesday, despite tumbling exports to the US.
Trump says tariffs will raise money for the US Treasury, protect American industries and bring investment into the United States. On Thursday, Taiwan agreed to invest $250 billion in the United States in return for Trump reducing the tariff on its products to 15 percent from 20 percent.
But the US president’s use of tariffs has often been arbitrary and unpredictable.
He targeted Brazil, for instance, for prosecuting his ally, former Brazilian president Jair Bolsonaro. On Friday, he again threatened to slap tariffs on countries that don’t support his efforts to wrest control of Greenland from Denmark.
Carney's gamble
Friday’s deal in Beijing marks a turnabout in Canadian policy.
In 2024, Canada had followed the US lead by imposing 100 percent tariffs on EVs from China, reflecting fears that inexpensive Chinese cars would overwhelm domestic North American automakers.
But the deal with China delivers benefits to Canada.
First, its canola farmers need export markets, and this pact lowers China’s tariff on canola from 84 percent to 15 percent. Canola farmers are hailing Canada’s new trade deal with China as great news that could restore exports for the major crop.
Second, the Trump administration, favouring fossil fuels over green energy, “is actively hostile to EV production in North America’’, said economist Mary Lovely, senior fellow at the Peterson Institute for International Economics.
America’s opposition “threatens to make the North American [auto] industry obsolete in the future, as China moves ahead with rapid quality improvements in batteries and electronics for EVs", she said.
“China’s strengths in electric vehicle sector are undeniable,” Carney said Friday. “China produces some of the most affordable and efficient energy-efficient vehicles in the world. And in order for Canada to build our own competitive EV sector, we need to learn from innovative partners, access their supply chains, and increase local demand.’’
READ MOREGlobal growth to slow in 2026 as tariffs and geopolitical tensions rise, UN says
But Carney’s economic rapprochement with Beijing amounts to a gamble.
“This was an extraordinarily difficult thing for Carney to do,’’ Alden said. “Relations between Canada and China have been extremely fraught.’’
In 2018, China detained two Canadians in retaliation for Canada arresting an executive of the Chinese tech firm Huawei at the request of the United States. All three were released in a 2021 swap. Canada also launched an investigation three years ago into whether the Chinese interfered in Canadian elections in 2019 and 2021.
The deal has drawn criticism already for exposing Canadian autoworkers to competition from low-price Chinese EVs. Ontario Premier Doug Ford, leading the province that is the centre of Canadian auto production, blasted the deal.
“Make no mistake: China now has a foothold in the Canadian market and will use it to their full advantage at the expense of Canadian workers,” Ford posted on social media. “Worse, by lowering tariffs on Chinese electric vehicles this lopsided deal risks closing the door on Canadian automakers to the American market, our largest export destination.”
In response to the criticism, Carney noted that the deal is limited. China can only export 49,000 EVs to Canada at the reduced 6.1 percent tariff rate, rising to about 70,000 in five years.
Other options
But the biggest risk to Canada comes from its prickly southern neighbour.
The US-Mexico-Canada Agreement (USMCA) – a regional trade pact that allows many goods to cross North American borders duty free – comes up for renewal this year. Trump is almost sure to demand changes meant to shift manufacturing to the United States and might threaten to pull out of the deal altogether, especially if he is inclined to punish Carney for reversing his policy with China.
That’s a scary thought for Canada, which sends 75 percent of its goods exports to the United States.
The Canada-China deal Friday “will make the talks more complicated", said William Reinsch, a former US trade official now with the Center for Strategic and International Studies.
"Trump will not be pleased with the Canadian action, will probably take some retaliatory measure, probably against the Canadian auto industry, and will certainly make it an issue in the USMCA talks.’’
On Friday anyway, Trump commended Carney: “If you can get a deal with China, you should do that.″ And Carney noted that the China deal is preliminary, potentially giving him flexibility to seek changes if necessary to head off a conflict with the US.
He also might be counting on getting a little help from US businesses.
American automakers depend on a network of plants across the US, Canada and Mexico and will fight hard to defend the USMCA. American farmers also rely on the pact for access to the Mexican and Canadian markets. And US tech companies like the way it liberalised digital trade in North America.
For now, Lovely said, Carney’s deal with China, sends “a big signal that Canada is looking to other partners and has options that would allow it to walk away from the USMCA before it makes humiliating compromises to serve only American interests".
(FRANCE 24 with AP)
Key US trade partners are responding to President Donald Trump’s often belligerent and unpredictable policies by looking to take their business elsewhere. Canada's decision on Friday to cut tariffs on Chinese electric vehicles is the latest example of how Trump's erratic trade policies are pushing allies into the arms of America's greatest economic rival.
Issued on: 17/01/2026
By: FRANCE 24
Canada's Prime Minister Mark Carney walks at Ritan Park, during the first visit by a Canadian prime minister to China since 2017, in Beijing, China, January 16, 2026.
© Carlos Osorio, Reuters
Since returning to the White House in January, Trump has overturned seven decades of US policy supporting ever-freer trade. He has imposed double-digit taxes on imports from almost every country on Earth as well as singling out specific industries, such as steel and autos, for levies of their own.
Critics warn raising tariffs to levels not seen since the Great Depression risks fuelling inflation and undermining US industries.
Canada broke with the United States on Friday by slashing its 100 percent import tax on Chinese electric vehicles in return for lower tariffs on Canadian farm products, particularly canola seeds.
“It’s a huge declaration of realignment in Canada’s economic relations,” said Edward Alden, who studies trade issues as senior fellow at the Council on Foreign Relations.
“The economic threat from the United States is now perceived by Canadians as far bigger than the economic threat from China. So this is a big deal.’’
Canada has repeatedly been the target of Trump’s wrath. In October, for instance, he said he was imposing a 10 percent tariff on Canadian imports as a reprisal for Ontario’s provincial government airing an advertisement that criticised the president’s go-to diplomatic tariff tool. He didn’t follow through on the increase, but tariffs on on some key Canadian sectors like steel and aluminium remain.
The deal with China is a potentially perilous one for Canada’s prime minister, Mark Carney, who risks retribution from Trump ahead of negotiations over the renewal of the US-Mexico-Canada Agreement, which is crucial to Canadian businesses.
But Canada is not alone in looking for alternatives to America’s massive market as Trump slaps huge tariffs on imports in an attempt to strong-arm other countries into moving production to the United States.
Since returning to the White House in January, Trump has overturned seven decades of US policy supporting ever-freer trade. He has imposed double-digit taxes on imports from almost every country on Earth as well as singling out specific industries, such as steel and autos, for levies of their own.
Critics warn raising tariffs to levels not seen since the Great Depression risks fuelling inflation and undermining US industries.
Canada broke with the United States on Friday by slashing its 100 percent import tax on Chinese electric vehicles in return for lower tariffs on Canadian farm products, particularly canola seeds.
“It’s a huge declaration of realignment in Canada’s economic relations,” said Edward Alden, who studies trade issues as senior fellow at the Council on Foreign Relations.
“The economic threat from the United States is now perceived by Canadians as far bigger than the economic threat from China. So this is a big deal.’’
Canada has repeatedly been the target of Trump’s wrath. In October, for instance, he said he was imposing a 10 percent tariff on Canadian imports as a reprisal for Ontario’s provincial government airing an advertisement that criticised the president’s go-to diplomatic tariff tool. He didn’t follow through on the increase, but tariffs on on some key Canadian sectors like steel and aluminium remain.
The deal with China is a potentially perilous one for Canada’s prime minister, Mark Carney, who risks retribution from Trump ahead of negotiations over the renewal of the US-Mexico-Canada Agreement, which is crucial to Canadian businesses.
But Canada is not alone in looking for alternatives to America’s massive market as Trump slaps huge tariffs on imports in an attempt to strong-arm other countries into moving production to the United States.
China sees record $1.19 trillion trade surplus in 2025 in spite of US tariffs
BUSINESS © FRANCE 24
05:43
05:43
China's record surplus
The European Union is expected to formally sign a trade pact Saturday with the South American alliance known as Mercosur, which includes the region’s two biggest economies, Brazil and Argentina. The EU is also pursuing a trade deal with India.
China, pounded by US tariffs since Trump’s first term, has also diversified its exports away from the world’s biggest economy to markets such as Europe and Southeast Asia.
It seems to be working. China’s trade surplus with the rest of the world surged to a record $1.2 trillion in 2025, the Chinese government reported Wednesday, despite tumbling exports to the US.
Trump says tariffs will raise money for the US Treasury, protect American industries and bring investment into the United States. On Thursday, Taiwan agreed to invest $250 billion in the United States in return for Trump reducing the tariff on its products to 15 percent from 20 percent.
But the US president’s use of tariffs has often been arbitrary and unpredictable.
He targeted Brazil, for instance, for prosecuting his ally, former Brazilian president Jair Bolsonaro. On Friday, he again threatened to slap tariffs on countries that don’t support his efforts to wrest control of Greenland from Denmark.
Carney's gamble
Friday’s deal in Beijing marks a turnabout in Canadian policy.
In 2024, Canada had followed the US lead by imposing 100 percent tariffs on EVs from China, reflecting fears that inexpensive Chinese cars would overwhelm domestic North American automakers.
But the deal with China delivers benefits to Canada.
First, its canola farmers need export markets, and this pact lowers China’s tariff on canola from 84 percent to 15 percent. Canola farmers are hailing Canada’s new trade deal with China as great news that could restore exports for the major crop.
Second, the Trump administration, favouring fossil fuels over green energy, “is actively hostile to EV production in North America’’, said economist Mary Lovely, senior fellow at the Peterson Institute for International Economics.
America’s opposition “threatens to make the North American [auto] industry obsolete in the future, as China moves ahead with rapid quality improvements in batteries and electronics for EVs", she said.
“China’s strengths in electric vehicle sector are undeniable,” Carney said Friday. “China produces some of the most affordable and efficient energy-efficient vehicles in the world. And in order for Canada to build our own competitive EV sector, we need to learn from innovative partners, access their supply chains, and increase local demand.’’
READ MOREGlobal growth to slow in 2026 as tariffs and geopolitical tensions rise, UN says
But Carney’s economic rapprochement with Beijing amounts to a gamble.
“This was an extraordinarily difficult thing for Carney to do,’’ Alden said. “Relations between Canada and China have been extremely fraught.’’
In 2018, China detained two Canadians in retaliation for Canada arresting an executive of the Chinese tech firm Huawei at the request of the United States. All three were released in a 2021 swap. Canada also launched an investigation three years ago into whether the Chinese interfered in Canadian elections in 2019 and 2021.
The deal has drawn criticism already for exposing Canadian autoworkers to competition from low-price Chinese EVs. Ontario Premier Doug Ford, leading the province that is the centre of Canadian auto production, blasted the deal.
“Make no mistake: China now has a foothold in the Canadian market and will use it to their full advantage at the expense of Canadian workers,” Ford posted on social media. “Worse, by lowering tariffs on Chinese electric vehicles this lopsided deal risks closing the door on Canadian automakers to the American market, our largest export destination.”
In response to the criticism, Carney noted that the deal is limited. China can only export 49,000 EVs to Canada at the reduced 6.1 percent tariff rate, rising to about 70,000 in five years.
Other options
But the biggest risk to Canada comes from its prickly southern neighbour.
The US-Mexico-Canada Agreement (USMCA) – a regional trade pact that allows many goods to cross North American borders duty free – comes up for renewal this year. Trump is almost sure to demand changes meant to shift manufacturing to the United States and might threaten to pull out of the deal altogether, especially if he is inclined to punish Carney for reversing his policy with China.
That’s a scary thought for Canada, which sends 75 percent of its goods exports to the United States.
The Canada-China deal Friday “will make the talks more complicated", said William Reinsch, a former US trade official now with the Center for Strategic and International Studies.
"Trump will not be pleased with the Canadian action, will probably take some retaliatory measure, probably against the Canadian auto industry, and will certainly make it an issue in the USMCA talks.’’
On Friday anyway, Trump commended Carney: “If you can get a deal with China, you should do that.″ And Carney noted that the China deal is preliminary, potentially giving him flexibility to seek changes if necessary to head off a conflict with the US.
He also might be counting on getting a little help from US businesses.
American automakers depend on a network of plants across the US, Canada and Mexico and will fight hard to defend the USMCA. American farmers also rely on the pact for access to the Mexican and Canadian markets. And US tech companies like the way it liberalised digital trade in North America.
For now, Lovely said, Carney’s deal with China, sends “a big signal that Canada is looking to other partners and has options that would allow it to walk away from the USMCA before it makes humiliating compromises to serve only American interests".
(FRANCE 24 with AP)
No comments:
Post a Comment