Canada Forges Major Energy and Trade Deals with China
Canada is cozying up to China as political tensions heat up between Canada and the United States. Canadian Prime Minister Mark Carney made key deals with China earlier this month on a diplomatic trip to Beijing, including major agreements for Chinese electric vehicles on the Canadian market and Canadian canola on the Chinese market. Carney also agreed to cooperate with China on generating more energy – both clean and conventional – going forward. These deals signal a broad shift in Canada’s diplomatic and trade strategy with a critical pivot away from its Western partners and toward Asia.
"It's a partnership that reflects the world as it is today, with an engagement that is realistic, respectful and interest-based," Carney said of his agreements with China in a news conference held in Beijing.
Carney is referring here to the fact that the lion’s share of global economic growth is now taking place in Asia. He is also referring to the newly volatile relationship between the United States and Canada, historically an iron-clad trade partnership and diplomatic allyship. Trump’s nationalistic trade strategies and aggressive attitude toward Canada have soured relations among the neighboring nations, and Carney was elected on a platform that heavily emphasized his ability and willingness to stand up to the United States President. And in order to do that, Canada will have to strengthen its economic ties elsewhere.
“If Canada wants to become an energy superpower, as Carney hopes, it will need to develop trade partnerships and, above all, energy partnerships with countries other than the U.S.,” The Conversation stated in a report earlier this week. “The rapidly growing Asian market, which is seeking stability and energy security, could represent a viable long-term opportunity.”
These deals signal a broad shift in Canada’s diplomatic and trade strategy with a critical pivot away from its Western partners and toward Asia. The BBC reports that the deal signals “a significant shift in Canada's policy on China, one that is shaped by ongoing uncertainty with the US, its largest trade partner.” Incredibly, Carney has asserted that under the Trump presidency, China has become a more predictable trading partner than the United States, less than a year after he called China "the biggest security threat" facing Canada.
Times have changed. Already, China is replacing a good deal of its U.S. oil imports with Canadian crude. Chinese buyers purchased a record-breaking amount of crude from Canada in 2025 as the latter’s Trans Mountain Expansion pipeline has facilitated an increase in exports with far easier access to Asia, and a trade war continues to rage on between Trump and China’s Xi Jinping.
It’s possible that China will seek to invest in the continued expansion of oil pipelines on the western Canadian coast, increasing the flow of crude bitumen from the Alberta oil sands to Chinese and other Asian markets. Canada has been pushing to build such a pipeline, and increased investment and a guaranteed buyer in China could grease the wheels, though there is considerable regional concern about Chinese companies owning or even co-owning a pivotal piece of energy infrastructure on Canadian soil.
Indeed, many Canadians are sharply critical of the deal, and some pundits think that Canada will have considerable regrets about cozying up to China in the not-too-distant future. Ontario Premier Doug Ford blasted the Prime Minister’s deal to remove Canadian tariffs on Chinese EVs, saying that the move "would hurt our economy and lead to job losses,” and adding on X that "inviting a flood of cheap made-in-China electric vehicles without any real guarantees of equal or immediate investment in Canada's economy".
A recent op-ed from the Washington Post’s editorial board argued that while the move is “not surprising because of President Donald Trump’s bullying” and the obvious short-term economic benefits of increased trading with China, “there is a fine line between ‘pragmatism’ and naiveté which Carney has already started to blur.”
“Frustrations with one American president need not give way to the agenda of dictators,” the article went on to assert.
By Haley Zaremba for Oilprice.com