Trump Threatens 100% Tariff on Canadian Imports Amid China Deal
On January 24, 2026, U.S. President Donald Trump announced a potential 100% tariff on all Canadian imports if Canada advances in its trade deal with China. This announcement comes just over a week after Canada declared a new strategic partnership with China focused on energy, agri-food, clean technology, and trade. Trump accused Canada of potentially becoming a gateway for Chinese goods into the U.S., warning of economic repercussions.
Canada’s Response and Strategic Moves
Canadian Prime Minister Mark Carney quickly responded, emphasizing that no comprehensive free trade agreement with China is on the table. He reaffirmed the importance of the U.S.-Canada relationship and launched a ‘Buy Canadian’ campaign to encourage domestic support amid increasing protectionist threats.
Under the new strategic partnership announced on January 16, Canada aims to enhance its economic ties with China. This includes plans to allow up to 49,000 Chinese electric vehicles into the Canadian market at a most-favoured-nation tariff of 6.1%, and a significant reduction in Chinese tariffs on Canadian canola seed to 15% by March 1, 2026. The agreement targets a 50% increase in Canadian exports to China by 2030.
Market and Economic Implications
The threat of tariffs has injected uncertainty into the markets, with U.S. indices like the Dow, S&P 500, and Nasdaq opening cautiously. However, ongoing earnings reports from major tech firms such as Tesla, Microsoft, Meta, and Apple have provided some stability.
Before this tariff threat, Canada’s economy showed resilience with a Q4 2024 growth rate of 2.6%, the highest non-pandemic performance since 2017. The unemployment rate stood at approximately 6.6%, and the participation rate hovered near a record high of 80% among those aged 15-64. Wage growth exceeded 4%, supporting strong real wage increases.
Expert Analysis and Future Outlook
Financial analysts express concern over a potential escalation of trade tensions between the U.S. and Canada, which could jeopardize the USMCA and broader economic cooperation. The International Monetary Fund has warned about the dangers of such protectionist measures, which could trigger a spiral of global trade tensions.
In the wake of these developments, experts caution Canada against over-relying on China, warning that the strategic shift could undermine long-standing alliances with the U.S. and expose Canada to risks associated with a major authoritarian trading partner.
As the situation evolves, the immediate risk lies in the potential disruption of North American trade and diplomatic relations. Canada’s strategy of economic diversification, particularly with China, will be closely watched, as will any legislative or policy responses from the U.S. The coming weeks will be crucial in determining the trajectory of U.S.-Canada relations and the stability of the global trade environment.
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