Other BriefingsFrom Carney to Poilievre: How Leadership Changes May Shape China-Canada Trade and Business
On March 9, 2025, Mark Carney was elected the new leader of the ruling Liberal Party of Canada, thus assuming the position of Canadian Prime Minister (PM) after the former party leader, Justin Trudeau, announced his resignation in early January.
The new PM comes into power amid an escalating trade war with Canada’s neighbor and biggest trade partner, as well as deteriorating relations with the Trump administration.
The election of a new Canadian PM, who was officially sworn in on March 14, offers a new opportunity to redefine relations with China, in particular as both countries seek to navigate trade and diplomatic relations with an increasingly hostile and protectionist US.
Carney, who has a history of engaging with China through his roles in global finance, has generally advocated for stronger business ties with China, particularly in areas like clean energy, technology, and trade. As former governor of the Bank of Canada and Bank of England, Carney is well-versed in international diplomacy and has pushed for more collaboration between Western nations and China, and has emphasized the importance of diversifying Canada’s trade relationships, offering a possible opening for improved ties with China.
However, China-Canada relations may be further complicated by leadership changes, as Carney is expected to call a snap within two weeks of his swearing in. This could see the election of opposition leader Pierre Poilievre, whose stance on China is much more confrontational. Poilievre has been a vocal critic of China, advocating for policies that include harsher trade measures, greater scrutiny of Chinese investments in Canada, and a tougher stance on Chinese technology.
In this article, we will examine the potential implications of Mark Carney’s leadership on Canada’s relationship with China, particularly in the context of escalating trade tensions with the US. We will also analyze the possible challenges that could arise from the election of Pierre Poilievre and explore how these dynamics could shape Canada’s foreign policy moving forward.
Background: China-Canada relations under Justin Trudeau
During his decade in office, Justin Trudeau oversaw a changing relationship with China that was characterized by both ambition and tension. Early in his tenure, there was optimism about the potential for stronger ties, with Canada seeking to enhance economic and diplomatic relations. In 2016, Canada and China began discussing a potential free trade agreement, and there was notable cooperation in areas like climate change, infrastructure, and trade.
However, this initial optimism was later overshadowed by a series of diplomatic conflicts, trade disputes, and broader geopolitical challenges. The most significant of these came in late 2018 when Canada arrested a top executive of the Chinese tech giant Huawei at the request of the US, leading to a swift and severe diplomatic response from China. In the aftermath, China imposed tariffs on several Canadian exports, including canola and pork, and suspended imports of Canadian beef. This escalation in tensions marked the beginning of a more strained and confrontational phase in the bilateral relationship.
Trade relations between Canada and China also became increasingly complicated during Trudeau’s tenure. Beyond the initial retaliation over the Huawei arrest, trade barriers continued to emerge, particularly in the agricultural sector. Canada faced growing restrictions on exports like canola, pork, and beef, significantly disrupting key industries. More recently, Canada also followed the US’s lead in imposing tariffs on Chinese electric vehicles and steel and aluminum imports.
These ongoing trade disputes, combined with the broader geopolitical climate, have made it increasingly difficult for Canada to navigate its relationship with China, complicating efforts to foster a more cooperative and balanced trade environment.
Carney’s China relations and policy stances
During his election campaign, Carney did not outline a comprehensive policy toward China in his new political role. However, his extensive history with China – shaped by his tenure as Governor of the Bank of Canada, Governor of the Bank of England, and Chair of the Financial Stability Board – suggests a pragmatic and business-oriented approach. His past engagements indicate a broad willingness to foster stronger economic ties, particularly in business, investment, and climate collaboration.
Carney is no stranger to high-level diplomatic interactions with China. He has met with President Xi Jinping multiple times, including in 2017 as Governor of the Bank of England and in 2019 as Chair of the Financial Stability Board. Most recently, in March 2024, he met with Xi again during a visit to Beijing in his capacity as Chair of the Board of Directors at Bloomberg, alongside US executives.
His interactions with China have largely been within the framework of global finance and policy, and he has generally advocated for Western countries to engage with China. As Governor of the Bank of Canada (from 2008 to 2013), he encouraged Canadian businesses to take advantage of China’s expanding middle class and economic growth. In 2017, while leading the Bank of England, he accompanied then-British Finance Minister Philip Hammond on a visit to China that resulted in agreements to enhance bilateral trade, expand clean energy cooperation, increase British investment in China’s Belt and Road Initiative, and establish London as a hub for offshore RMB transactions.
Carney has also been critical of isolationist trade policies. In 2019, he warned that Trump’s trade war with China could “shipwreck” the global economy. More recently, in a March 2024 interview with China’s 21st Century Business Herald, he called for deeper cooperation with China on climate change, clean technology, and sustainable finance while praising Beijing’s steps toward expanding market access.
However, despite his past support for economic engagement with China, Carney may face significant political pressure to take a tougher stance as PM. Canada’s political landscape is broadly skeptical of China, and as he is expected to call a snap election soon, Carney will have to contend with opposition leader Pierre Poilievre, whose hardline stance on China could push Carney to take a more confrontational position to maintain public support.
Carney’s own economic strategy reflects a degree of caution toward China. His plan for economic growth, which emphasizes making Canada the strongest economy in the G7, explicitly identifies China as a national security concern, stating that “an emboldened China [is] seeking to gain the advantage in tech and AI.” This signals a degree of alignment with the US in framing China’s technological rise as a geopolitical challenge.
Canada-China trade relations under Carney
Carney’s strategy for mitigating the impact of US tariffs on Canadian goods primarily focuses on reducing internal trade barriers. However, if Canada can resolve ongoing trade disputes with China, he may also look to expand economic opportunities in that direction.
According to his plan for government, Carney’s core mission is to “grow the strongest economy in the G7”, seeking to outpace the US in economic growth. Within this economic plan, Carney laments Canada’s reliance on the US for trade and calls for diversifying its trade by forming relationships with “like-minded countries”.
For too long, Canada has relied too heavily on the United States as our default trading partner. Canada must diversify and expand its trading relationships by becoming an essential partner for like-minded countries, drawing on our vast resources of conventional and clean energy, critical metals and minerals, leadership in AI, and deep human capital.
- Mark Carney’s Economic Pillars for Change
While it’s unlikely that Canada sees China as a “like-minded country,” improved relations could still help reduce Canada’s dependence on the US for trade, particularly in energy and agriculture, provided existing trade disputes can be resolved.
For instance, with Trump’s 10 percent tariff on Canadian natural gas making it less competitive in the US market, Canada could redirect more of its exports to China. As one of the world’s largest natural gas importers, China has shown significant interest in Canadian LNG, especially as Canada expands its export capacity along the West Coast through projects like LNG Canada and Cedar LNG. With shorter shipping routes compared to US Gulf Coast exports, stronger energy ties between Canada and China could foster a long-term, mutually beneficial trade partnership.
Similarly, there is potential in agriculture. The 25 percent tariff on Canadian agricultural exports to the US raises costs for American buyers and creates financial strain for Canadian farmers. Meanwhile, China continues to be one of the world’s largest importers of agricultural products, with increasing demand for goods like wheat, canola, meat, and seafood. In 2023, Canada exported US$1.5 billion worth of cereals and US$1.05 billion worth of seafood to China, demonstrating the country’s growing appetite for high-quality imports. As demand for premium agricultural goods continues to rise, greater market access could offer Canadian farmers an alternative to the US and help mitigate risks from shifting trade policies.
However, Canada-China trade relations remain fraught with disputes. In October 2024, Canada imposed 100 percent tariffs on Chinese electric vehicles and 25 percent tariffs on Chinese steel and aluminum, mirroring US trade measures. China retaliated in March 2025 by announcing a 100 percent tariff on Canadian canola oil, oil cakes, and peas, along with a 25 percent tariff on Canadian seafood and pork. Additionally, China’s ongoing anti-dumping probe into Canadian rapeseeds is ongoing, and its 2021 ban on Canadian beef remains unresolved.
Carney will face a difficult task in navigating these trade tensions. Resolving disputes with China will require diplomatic maneuvering, not only with Beijing but also within his own party, where skepticism toward China runs high. Any effort to improve trade ties will need to be carefully managed to avoid political backlash.
Collaboration on carbon reduction
Despite broader trade tensions, climate change presents a potential avenue for cooperation between Canada and China under Mark Carney’s leadership. As a staunch advocate for green finance and carbon reduction, Carney has emphasized that Canada’s long-term economic competitiveness hinges on leadership in low-carbon industries. His tenure as the UN Special Envoy on Climate Action and Finance, along with his role in the Glasgow Financial Alliance for Net Zero (GFANZ), underscores his belief that international collaboration is essential to achieving meaningful progress on carbon reduction.
China, meanwhile, has positioned itself as a global leader in clean energy, investing heavily in renewable technologies such as solar, wind, batteries, and hydrogen. These shared priorities create opportunities for joint research, investment, and trade in green technologies that could be mutually beneficial – both economically and environmentally.
Carney has previously praised China’s progress in green energy and finance. In the interview with 21st Century Business Herald, he highlighted China’s role in making renewables more accessible by expanding capacity and lowering costs. He also highlighted the role of Hong Kong and the Guangdong-Hong Kong-Macao Greater Bay Area in the development of green finance.
China has made great contributions to addressing climate change, not only in its massive investment in clean technologies and exporting these technologies to other countries, but also in its active development of the financial system needed for green transformation.
- Mark Carney, 21st Century Business Herald interview
Carney has described China’s advancements in renewable energy and battery technology as “extraordinary” and “very welcome,” emphasizing that the declining cost of photovoltaics, electric vehicles, and energy storage has been pivotal to global green transformation.
Canada, with its own expanding clean energy sector, could leverage China’s expertise in manufacturing and scaling green technologies while contributing its strengths in regulatory frameworks, carbon pricing, and sustainable finance.
The potential for deeper collaboration is further reinforced by the shifting US climate policy under Trump. Since returning to office, Trump has prioritized fossil fuel expansion, rolled back climate regulations, cut federal support for renewables, and withdrawn the US from international climate initiatives. His administration has also frozen funding for green technologies provided through the Inflation Reduction Act.
With the US retreating from climate leadership, Canada may seek new partners to advance its clean energy and sustainability goals. China, as the world’s largest investor in renewable energy, presents a logical alternative. Strengthening ties in critical minerals, battery production, hydrogen development, and carbon finance could help Canada maintain its global standing in green industries, even as Washington scales back its commitments.
This shift also has trade implications. The Trump administration has imposed tariffs on Chinese clean technology imports, including electric vehicles and solar panels, in an effort to protect domestic manufacturing. If Canada takes a more open approach and resolves trade disputes with China, it could attract Chinese investment in its clean energy sector, benefiting from access to advanced technologies while opening new markets for its own low-carbon exports.
Beyond economic incentives, climate cooperation could serve as a stabilizing factor in Canada-China relations, offering a neutral space for engagement despite existing geopolitical and trade frictions.
Balancing relations with the US and China
One of Carney’s greatest challenges will be maintaining a stable relationship with both the US and China. Given that the US remains Canada’s largest trading partner, Carney’s primary focus will be on securing trade concessions and reducing tensions with Washington. However, in doing so, he may face pressure to align more closely with the US on China policy, including trade restrictions and investment bans.
The Trump administration has already used national security concerns – such as the alleged flow of Chinese-made fentanyl through Canada into the US – as justification for imposing tariffs on Canadian goods. To ease trade tensions with Washington, Canada may be pressured into implementing tougher restrictions on Chinese imports under the pretense of curbing fentanyl trafficking.
Meanwhile, China has signaled a willingness to reset relations with Canada. Following Carney’s election, Chinese Foreign Ministry spokesperson Mao Ning stated that China hopes Canada will “pursue a positive and pragmatic policy towards China, and work with China in the same direction for the improvement and growth of bilateral relations.”
Ultimately, Carney will need to navigate a complex and shifting geopolitical landscape. While his past engagements suggest a preference for economic cooperation with China, domestic and international pressures may force him to adopt a more cautious and strategic approach. Whether he can strike a balance between economic pragmatism and political realities will be a defining factor in Canada-China relations under his leadership.
China-Canada relations in the event of new leadership
As China and Canada prepare for a potential reset in diplomatic ties under Mark Carney’s leadership, the political landscape in Canada remains uncertain.
Canada is scheduled to hold a general election on October 22, 2025. However, following his election as Liberal Party leader, Carney is expected to call an early election in the two weeks following his swearing into office, aiming to capitalize on the surge of public support the Liberals have gained amid the diplomatic turbulence caused by the Trump administration. The election is expected to take place by the end of March 2025.
While Carney seeks to strengthen his party’s position and secure legitimacy as an elected leader, he faces stiff competition from the opposition Conservative Party. Early polling – though limited – suggests that Conservative leader Pierre Poilievre remains the front-runner. A Conservative victory would drastically alter the trajectory of any prospective Canada-China rapprochement, given Poilievre’s far more confrontational stance on Beijing.
Poilievre’s China policy and trade stance
Although the Conservative Party’s official trade platform focuses on reducing international trade barriers and expanding ties with emerging markets, Poilievre’s positions on China are notably aligned with those of the Trump administration. He has backed Canada’s decision to mirror US tariffs on Chinese-made electric vehicles, steel, and aluminum – measures imposed by the Canadian government in October 2024. Additionally, he has echoed US claims regarding the influx of Chinese-made fentanyl into North America, reinforcing his party’s broader skepticism toward Beijing.
Beyond trade, the Conservatives have adopted a markedly adversarial approach to China. Their policy platform calls for an “assertive foreign policy” that includes:
- Ending military cooperation with China
- Restricting Chinese involvement in sensitive Canadian research institutions
- Banning state-linked Chinese entities from acquiring Canadian firms or sensitive technologies
- Advocating for China’s suspension from the WTO until it implements “equitable economic reforms”
Given these positions, a Poilievre government would likely align closely with the Trump administration’s anti-China trade policies, potentially extending tariffs, investment restrictions, and export bans.
Canada-US relations under a conservative government
Despite ideological similarities between the Canadian Conservative Party and Trump’s Republican Party, a Poilievre victory would not necessarily lead to warmer US-Canada ties. Poilievre has urged Canada to take a more aggressive stance in trade disputes with Washington, even proposing retaliatory tariffs to counter Trump’s protectionist measures. He previously called for Canada to match the US’s (never-enforced) 50 percent tariffs on steel and aluminum, signaling his willingness to push back against American economic pressure.
Furthermore, irrespective of who wins Canada’s election, public sentiment in the country remains overwhelmingly anti-Trump, antagonized by both the trade tariffs and suggestions that Canada should become the US’s “51st state”. Any Canadian leader will face domestic pressure to resist Trump’s tariffs and avoid appearing overly compliant with his administration.
If Canada adopts a more confrontational approach toward the US on trade, Pierre Poilievre may find himself under pressure to rethink his stance on China. While he has positioned himself as a staunch critic of Beijing, his economic policies will ultimately have to account for the realities of global trade and Canada’s need to maintain economic stability. If Trump’s administration imposes aggressive tariffs or other protectionist measures that harm Canadian industries, Poilievre may be forced to explore alternative trade partnerships to mitigate the economic fallout.
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