A week after an Ontario-funded anti-tariff ad prompted US President Donald Trump to pause trade talks with Ottawa, Canadian Prime Minister Mark Carney held a notably warmer meeting with none other than Chinese President Xi Jinping, according to Washington Post correspondent Amanda Coletta.

Coletta writes that Sino-Canadian relations, frozen since China’s 2018 detention of two Canadians, appear to be thawing. Despite past accusations of espionage, election interference, and economic retaliation, all denied by Beijing,  Carney described his recent meeting with Xi, held on the sidelines of the Asia-Pacific Economic Cooperation summit, as a “turning point.” He accepted an invitation to visit China, signaling a cautious shift in policy.

The moment illustrates how Trump tariffs and economic pressure from the United States are pushing Canada toward deeper ties with China, India, and other global partners, according to Coletta, adding that Canadian leaders say they are now pursuing a long-term strategy to move from “reliance to resilience” by reducing dependence on the United States, which still accounts for over 75% of Canadian exports.

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Canada’s cautious rapprochement with China

Canada’s 2024 federal budget outlines the urgency: “The rules-based international order and the trading system that powered Canada’s prosperity for decades are being reshaped, threatening our sovereignty, our prosperity, and our values.” In response, the Canadian government is calling for a redefinition of Canada’s international relationships, not just a transition, but a rupture.

Carney, who secured reelection in April by positioning himself as the best candidate to manage this rupture, is pursuing new ties with China and India, despite strained relations. His government argues this pragmatic approach is necessary in the face of shifting global dynamics.

Coletta writes that some analysts see promise and peril in this pivot. Lynette Ong, director of the China Governance Lab at the University of Toronto’s Munk School of Global Affairs, warned that the shift should not end with China alone. “Moving away from an unreliable America does not make China more reliable,” she said. “It’s about diversification of risks.”

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Seeking economic diversification beyond the United States

Export Development Canada reports a spike in business interest for global trade alternatives. Website traffic is up 61% this year, and visits to trade diversification tools rose by 93%. Still, meaningful diversification has long proven difficult. Even with over a dozen free-trade agreements covering 50+ countries, most Canadian exports still go to the United States. In 2024, China accounted for only 4%.

Carney’s budget includes billions for trade-enabling infrastructure, ports, airports, and staffing to support international trade missions. The aim, according to Coletta, is to open new markets for Canadian goods and services.

Gaphel Kongtsa of the Canadian Chamber of Commerce sees promise in the approach: “The measures that the government is taking now are the right kinds of measures, but it won’t be easy.”

The Washington Post writer says that Trump tariffs are already weighing heavily on Canada's export-driven economy. Exports fell 7% in August from the 2024 average; exports to the United States dropped by 10%. Major automakers, including GM and Stellantis, announced plans to move some production south.

“Trade friction means our economy will work less efficiently, with higher costs and less income,” said Bank of Canada Governor Tiff Macklem during a parliamentary hearing.

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India and the risks of realignment

Coletta writes that Carney has pursued negotiations to ease Trump tariffs, but progress is stalled. After apologizing to Trump for the Ontario ad, which featured 1987 audio from former US president Ronald Reagan criticizing tariffs, Carney faced sharp criticism from US Ambassador Pete Hoekstra, who called the ad a case of foreign interference.

Still, the Washington Post writer states that Carney is pressing ahead. He has signed a trade deal with Indonesia, launched “energy corridors” with Mexico, and initiated talks with the United Arab Emirates. His first foreign trip as prime minister was to Europe, where Canada and EU officials signed a deal for Ottawa to participate in Europe’s $173 billion defense procurement plan.

Despite a Canada-EU free trade agreement in place since 2017, several member states have not ratified it. A Canadian official told the Washington Post that the government seeks an arrangement with Europe similar to those of Norway or Switzerland, deep economic integration without EU membership.

Javier Moreno Sánchez, chair of the European Parliament’s delegation for relations with Canada, welcomed the ambition: “It’s in our mutual interest to strengthen the relationship. But we have to act now.”

Meanwhile, relations with India remain complicated. Canadian authorities blame Indian officials for the 2023 killing of a Sikh separatist in British Columbia and accuse New Delhi of election interference. India denies the allegations and has criticized Canada for harboring Sikh separatists. Diplomatic expulsions followed, and India suspended visa services in Canada.

Carney, signaling a different approach, invited Indian Prime Minister Narendra Modi to a G7 summit in the Canadian Rockies. Ambassadors have since returned, and trade talks resumed on Sunday.

A senior Canadian official told the Washington Post that the country can no longer afford to let diaspora politics dictate foreign policy. “We no longer have the luxury,” the official noted, adding that this more “pragmatic” posture gives Canada “more room to maneuver.”

Read more: China retaliates against Canada with new agricultural tariffs

Challenges ahead for Canada’s global trade strategy

Critics argue that the shift prioritizes economic expediency over principles. Balpreet Singh of the World Sikh Organization of Canada called the realignment “a complete betrayal.”

“Our position is that Canada’s partnerships need to be based on respect for the rule of law and respect for our sovereignty,” he said. “But this relationship seems to be based pretty much on convenience. For us, accountability and security have to come before trade.”

While reopening channels with China and India may unlock new trade avenues, both opportunities come with risks. Past diplomatic rifts and ongoing tensions raise questions about whether such ties can withstand future shocks.

But as Trump tariffs continue to hit Canadian exports and regional industries suffer, Ottawa is betting that recalibrating its international alliances is not just necessary, it's unavoidable.

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