Canada looks to China as trade diversification gains momentum

Canada is stepping up efforts to diversify its trade as a renewed tariff confrontation with the United States puts fresh pressure on Ottawa to broaden its economic relationships.

The US imposed a 50 percent tariff on C$27.6 billion ($19.6 billion) worth of Canadian goods effective Aug 22, prompting Canada to impose matching counter-tariffs on selected US products from Sept 8.

The Canadian government has since emphasized the need to diversify trade and reduce dependence on any single partner.

On Sept 29, a US ban on nearly $1 billion in annual imports from Canada took effect, targeting most Canadian alcoholic beverages, some dairy products and certain motorcycles.

US President Donald Trump recently described Canada as "very difficult to deal with" and said: "Canada would like to make a deal, but we're not satisfied with it."

Ron Stagg, a professor of history at Toronto Metropolitan University who studies Canadian-American relations, said the Canadian response to the latest US tariffs was being driven not only by economic considerations but also by growing frustration with what Ottawa sees as continuing demands from Washington.

"Up until now the Carney government has treated the American government as a tough negotiator that will respond to conciliatory steps," Stagg told China Daily.

"However, it is clear now that every time Canada gives a little, the US makes new demands," he said.

He said the trade confrontation would reinforce Canada's efforts to build an economy that was less vulnerable to US pressure.

China has emerged as one of the most significant destinations in that effort, with bilateral trade showing stronger export momentum in the first half of this year and both governments moving to restore market access in several areas.

Canadian exports to China rose 30.1 percent year-on-year to C$21.74 billion in the first half of 2026, while imports from China fell 5.8 percent to C$44.86 billion, according to a report released by the Canada China Business Council and the China Institute at the University of Alberta.

Total merchandise trade reached C$66.6 billion, up 3.6 percent from a year earlier.

Bijan Ahmadi, executive director and COO of the Canada China Business Council, told China Daily the "most significant takeaway from the first half of 2026 is that Canada-China trade became more export-oriented".

But the change in imports does not necessarily point to a broad retreat from Chinese products, he said.

"The import decline was not a uniform retreat from Chinese supply: consumer goods and electronics weakened, while machinery, batteries and vehicles continued to grow," Ahmadi said, adding that full-year data would be needed before drawing broader conclusions.

The report described the relationship as expanding "selectively rather than uniformly".