Carney Says Canada Is Discussing Deeper China Trade Ties as U.S. Share of Canadian Exports Falls to 68%

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Canada’s relationship with its largest trading partner is undergoing a significant transformation, and Prime Minister Mark Carney is looking increasingly toward China as Ottawa searches for new economic opportunities. With the United States accounting for approximately 68% of Canadian merchandise exports during the first nine months of 2026, down from roughly three-quarters in previous years, the federal government is accelerating efforts to reduce its dependence on the American market.

Speaking in Winnipeg on November 6, Carney confirmed that Canada is discussing ways to expand commercial relations with China beyond agreements already reached on agriculture and electric vehicles. The discussions come amid continuing U.S. tariff pressure, shifting global trade patterns, and growing recognition that Canada’s economic security may depend on building stronger relationships with multiple international partners.

Canada’s 68% Export Figure Signals a Major Trade Shift

For decades, Canadian businesses have relied heavily on American customers, benefiting from geographic proximity, established supply chains, and trade agreements that facilitated cross-border commerce. However, the latest figures suggest that this dependence is gradually changing. According to trade data covering January through September 2026, approximately 68% of Canadian merchandise exports went to the United States. Scotiabank’s economic analysis indicates that the American share averaged roughly 76% in 2024 and 72% in 2025, illustrating a broader movement toward markets outside the United States.

The distinction between different reporting periods is important. Statistics Canada’s September 2026 figures showed that 70.2% of merchandise exports went to the United States during that particular month, even though the share for the first nine months was approximately 68%. These numbers are not contradictory. Monthly trade patterns fluctuate with commodity prices, shipping schedules, and international demand. Nevertheless, the longer-term shift carries significant implications for Canadian manufacturers, agricultural producers, and exporters that have traditionally treated the American market as their most dependable source of revenue.

Carney Confirms Discussions About Expanding Trade With China

During a November 6 news conference in Winnipeg, Carney confirmed that Canadian and Chinese officials were exploring additional opportunities to strengthen economic relations. The discussions build upon the strategic partnership established earlier in 2026, when Ottawa and Beijing reached preliminary agreements addressing agricultural tariffs and Chinese electric vehicle imports. Rather than limiting cooperation to existing arrangements, the prime minister indicated that both governments were considering additional areas where commercial relationships could expand.

The timing is significant because several high-level diplomatic meetings are approaching. Chinese Vice Premier He Lifeng is expected to visit Canada in the coming week, while Carney is scheduled to attend the Asia-Pacific Economic Cooperation leaders’ summit in Shenzhen, China, later in November. The prime minister has also indicated that he expects to meet Chinese President Xi Jinping during the summit. These meetings could provide opportunities to discuss investment, market access, and additional trade cooperation, although no comprehensive new trade agreement has been announced. For Canadian businesses, the immediate question is whether diplomatic progress will translate into dependable export opportunities.

Canadian Farmers Receive Important Trade Relief Through 2028

Agriculture has become one of the clearest examples of what improved Canada-China relations could deliver. On November 4, International Trade Minister Maninder Sidhu announced that both countries had agreed to extend favourable market access for Canadian canola meal, peas, lobster, and crab through the end of 2028. The arrangement was reached during meetings in Beijing with Chinese Commerce Minister Wang Wentao. Most importantly for the canola industry, the agreement extends the suspension of China’s previous 100% tariff on Canadian canola meal, providing additional certainty for producers and exporters.

The agreement builds on tariff reductions introduced earlier in 2026. China lowered its combined tariff on Canadian canola seed to 14.9%, down from nearly 85%, while canola meal received separate tariff relief. These are different products with different tariff arrangements, and China’s 100% tariff on Canadian canola oil remains in place. For Prairie farmers preparing budgets and crop plans for 2027, the extended access could make an important difference. The Canola Council of Canada and Canadian Canola Growers Association welcomed the extension, emphasizing that predictable access helps farmers make marketing decisions at a time when production costs remain elevated.

Chinese Electric Vehicles Remain Central to Canada’s Trade Strategy

The agricultural improvements are closely connected to a controversial decision involving Canada’s automotive market. During Carney’s January visit to Beijing, Ottawa agreed to establish an annual import quota beginning at 49,000 Chinese electric vehicles, subject to a 6.1% tariff. The arrangement took effect on March 1, replacing the previous 100% surtax with a managed import system. The initial quota represents less than 3% of Canada’s new-vehicle market, allowing a limited number of Chinese-built vehicles to enter under a framework designed to provide predictable market access.

The federal government argues that the arrangement could encourage Chinese automotive investment, support Canadian electric vehicle supply chains, and expand access to lower-priced vehicles. By 2030, half of the annual quota is scheduled to be reserved for vehicles with an import value of $35,000 or less. However, the policy also raises concerns about competition for domestic manufacturers and the future of automotive employment. Ontario’s auto industry remains closely integrated with American production networks, making the shift particularly sensitive. Whether the agreement ultimately creates Canadian manufacturing jobs will depend on investments that have yet to be fully realized.

China Is Already One of Canada’s Most Important Trading Partners

China is not an entirely new market for Canadian exporters. According to Global Affairs Canada, bilateral merchandise trade reached approximately $125.7 billion in 2025, making China Canada’s second-largest single-country merchandise trading partner. Canadian exports accounted for about $35 billion of that total, while imports from China reached approximately $90.6 billion. The figures demonstrate both the commercial importance of the relationship and the substantial imbalance between what Canada sells to China and what it purchases. For Canadian companies, expanding exports would represent an opportunity to strengthen their position in an already significant trading relationship.

More recent figures indicate that Canadian merchandise exports to China increased by 31.4% during the first half of 2026, reaching approximately $21.5 billion. The Carney government has established a goal of increasing Canadian exports to China by 50% by 2030, although achieving that target will depend on sustained market access and demand. Agriculture, energy, natural resources, clean technology, and consumer products are among the sectors Ottawa has identified as offering commercial opportunities. For Canadian producers, the attraction is straightforward: access to additional customers could provide another source of revenue when traditional export markets become unpredictable.

September’s Trade Figures Reveal a More Complicated Economic Picture

Canada’s latest monthly trade statistics demonstrate why the diversification effort cannot be judged by a single headline figure. Statistics Canada reported merchandise exports of approximately $78.6 billion in September 2026, while imports totalled $73.2 billion, producing a trade surplus of about $5.4 billion. Exports to the United States increased by 0.7%, reaching approximately $55.2 billion. Meanwhile, exports to China rose 3% from August to roughly $4.45 billion. Those figures indicate that Canada continues to sell substantial volumes into both markets, even as its broader trading relationships evolve.

However, the strength of the headline numbers concealed weakness elsewhere. Exports to countries outside the United States declined 1.1% in September, while eight of the eleven major product categories recorded decreases in total exports. Energy and precious-metal shipments helped offset those declines, with higher crude oil and gold exports contributing significantly to the overall result. Excluding energy products and metal and non-metallic mineral products, Canadian exports fell 5.6%. Export volumes also declined 4%, highlighting the difference between higher export revenues and increased physical shipments. For policymakers, the challenge is ensuring that diversification reflects sustainable growth across industries rather than temporary movements in commodity prices.

U.S. Tariffs Are Accelerating Canada’s Search for New Markets

Canada’s expanding relationship with China is unfolding against the backdrop of continuing trade tensions with Washington. President Donald Trump’s tariff policies have created additional costs and uncertainty for Canadian exporters, particularly in manufacturing industries that depend on cross-border commerce. Scotiabank’s November 4 trade analysis estimated that Canada’s effective U.S. tariff rate had increased to approximately 4.5%, compared with about 3% before the latest measures. The bank also reported that Canadian exports in several tariff-exposed sectors remained below December 2024 levels, including steel, forestry products, and automobiles.

Nevertheless, Ottawa’s efforts to strengthen relations with China do not mean the federal government intends to abandon American trade. Carney said on November 6 that Canada welcomed efforts by U.S. lawmakers to restore free trade and would continue negotiating an arrangement that serves Canadian interests. Most Canadian exports to the United States still benefit from tariff-free access, making the American market extraordinarily important. The broader strategy is therefore about reducing vulnerability rather than replacing one customer with another. For Canadian manufacturers, having access to several dependable markets could provide greater flexibility when tariffs or political disagreements disrupt established supply chains.

Deeper China Trade Ties Also Carry Significant Economic Risks

Despite the potential opportunities, expanding trade with China introduces challenges that Ottawa cannot overlook. Global Affairs Canada identifies several concerns associated with commercial activity in China, including unpredictable market-access restrictions, uneven regulatory enforcement, and intellectual property risks. Canadian businesses have experienced how quickly trade conditions can change when political relationships deteriorate. The recent canola dispute provides a particularly relevant example, with agricultural products facing substantial tariffs before negotiations produced relief. Stronger diplomatic relations may reduce some uncertainty, but they cannot eliminate the possibility of future disagreements.

Security considerations add another layer of complexity, particularly where technology, critical minerals, and advanced manufacturing are concerned. Canada’s Investment Canada Act permits the federal government to review foreign investments for potential national security risks, including transactions involving sensitive technologies, infrastructure, or data. These safeguards remain relevant as Ottawa explores additional Chinese investment in Canadian industries. The challenge for policymakers is finding an approach that encourages commercially beneficial partnerships without creating new strategic dependencies. Diversification would offer limited protection if excessive reliance on one market were simply replaced by excessive reliance on another. A successful strategy must balance commercial opportunity with long-term economic independence.

Europe and Southeast Asia Are Equally Important to Carney’s Plans

China represents only one component of a much broader effort to strengthen Canada’s international economic relationships. Carney is scheduled to travel to Ireland, the Philippines, Cambodia, and China between November 11 and 19, with trade and investment among the central priorities. In Ireland, discussions are expected to advance cooperation with European partners. In the Philippines, the prime minister will work toward completing Canada-ASEAN and Canada-Philippines free trade negotiations. The federal government estimates that an agreement with ASEAN could unlock more than $3.5 billion in Canadian export opportunities, although those benefits would depend on successful implementation.

This international outreach aligns with a major economic objective outlined in Canada’s 2026 federal budget: doubling exports to markets outside the United States by the end of 2035. The budget also emphasizes trade infrastructure and measures intended to help Canadian companies become more competitive internationally. Europe already represents a major commercial relationship, with Canada-EU trade in goods and services valued at approximately $178 billion in 2025. Expanding relationships across multiple regions could give Canadian exporters more options while reducing their exposure to disruptions in any single market. The central challenge will be converting diplomatic agreements into lasting commercial transactions.

The Real Test Will Be Whether Trade Diversification Creates Canadian Jobs

For Canadian workers, the significance of closer economic relations with China will ultimately depend on whether those partnerships support stable employment and business growth. The federal government’s 2026 budget identifies approximately 2.2 million jobs as directly supported by Canadian export sectors, illustrating how closely international commerce is connected to household economic security. A stronger market for canola could improve revenue opportunities for Prairie producers, while dependable seafood exports could benefit Atlantic fishing communities. Additional investment in Canadian manufacturing could also create opportunities, provided projects lead to actual production and employment rather than remaining preliminary commitments.

The coming weeks should provide a clearer indication of how Ottawa intends to advance its strategy. Carney’s expected meetings with Chinese officials, the continued implementation of agricultural agreements, and discussions surrounding automotive investment will help determine whether the relationship develops beyond its existing framework. At the same time, Canada will need to maintain its American commercial connections and pursue agreements with other international partners. The decline in the U.S. share of Canadian exports to approximately 68% during the first nine months of 2026 demonstrates that trade patterns are changing. Whether that shift produces lasting economic resilience will depend on the markets, investments, and jobs that follow.

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