The Guardian on Friday reported that Canadian Prime Minister Mark Carney declared the end of the postwar era of liberalized free trade, warning Asia-Pacific leaders that the global economy is undergoing one of its most profound transformations since the fall of the Berlin Wall.

Speaking at the  APEC summit in South Korea, Carney said the "old world of steady expansion of rules-based liberalised trade and investment", which had long underpinned prosperity for many nations, including Canada, "is gone."

Carney explained that Canada would seek to reduce its heavy dependence on the United States by targeting a doubling of non-US exports within the next decade. His remarks signaled a major policy shift toward economic diversification amid mounting global trade tensions.

Later, in the first official meeting between Canadian and Chinese leaders since 2017, Carney met with President Xi Jinping and expressed readiness to work together to "help build a more sustainable, inclusive international system." Xi, for his part, said ties between the two countries were showing "a recovery toward a trend of positive development" and invited Carney to visit China. "China is willing to work with Canada to bring China-Canada relations back to the right track," Xi said.

Carney welcomed the invitation, saying, "I also welcome the invitation to come to China to further the dialogue and I very much look forward to doing so," adding that he anticipated a "constructive and pragmatic dialogue."

Trade Truce

His statement on the demise of "rules-based" trade came just days after Xi and US President Donald Trump agreed to de-escalate their trade dispute. The temporary truce, while relieving immediate market pressures, highlighted the deep ideological divide between the world’s two largest economies.

Earlier this month, Carney had noted that Canada would only resume trade talks with Washington "when the Americans are ready," a comment referencing Trump’s abrupt decision to terminate all negotiations following a televised advertisement by Ontario’s government criticizing US tariffs and quoting Ronald Reagan’s warning that "trade barriers hurt every American worker."

Xi, in his own remarks earlier Friday, defended global free trade and cooperation amid growing volatility, saying, "The more turbulent the times, the more we must work together. The world is undergoing a period of rapid change, with the international situation becoming increasingly complex and volatile."

Shifting Alliances

The APEC summit discussions, dominated by concerns over trade fragmentation and supply chain resilience, were overshadowed by Trump’s earlier meeting with Xi, where the two leaders agreed to retract their most extreme tariff and export control threats. The US was represented at APEC by Treasury Secretary Scott Bessent, while Trump left the summit following his talks with Xi, a move critics viewed as a signal of waning American engagement in the region.

Meanwhile, US Defense Secretary Pete Hegseth met Chinese and Indian counterparts in Malaysia during the ASEAN defense summit, stating on X that Washington would "stoutly defend its interests" in the Indo-Pacific and maintain regional balance amid China’s growing military presence.

Regional Tensions

Xi also met Japan’s new Prime Minister Sanae Takaichi, where both sides called for a "strategic and mutually beneficial relationship" despite long-standing disputes. "Japan and China share responsibilities for the peace and prosperity of the region," Takaichi said, adding that she hoped dialogue could reduce existing frictions. Xi responded that he intended to maintain communication to keep relations "on the right track."

Takaichi, known for her nationalist positions and visits to Tokyo’s Yasukuni Shrine, announced that Japan would accelerate its defense spending plans, committing to reach 2% of GDP by March 2027. Disputes over Japanese seafood exports and the Senkaku/Diaoyu islands remain unresolved, underscoring the fragile balance of power in East Asia.

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