Trump threatens 100% tariff on Canada over China deal

• Canada and China reached a preliminary deal allowing up to 49,000 Chinese EVs into Canada at a 6.1% tariff rate, while China would lower tariffs on Canadian canola seed to approximately 15%
• Trump reversed his stance from January 16 when he told reporters that Carney 'should be doing' a China trade deal and called it 'a good thing'
• The threat follows Carney's speech at the World Economic Forum cautioning against economic coercion by superpowers and calling for 'middle powers' to band together

SUMMARY

President Donald Trump threatened to impose a 100% tariff on Canadian goods if Canada proceeds with a trade deal with China, warning that he would not allow Canada to become a "drop-off port" for Chinese products entering the U.S. market.

Key Developments:

Canadian Prime Minister Mark Carney recently announced a preliminary trade agreement with China that would allow up to 49,000 Chinese electric vehicles into Canada at a 6.1% most-favored-nation tariff rate. In exchange, China would reduce tariffs on Canadian canola seed to approximately 15%.

Trump's position shifted dramatically from just one week earlier (January 16), when he supported Carney's China negotiations, stating "If you can get a deal with China, you should do that."

Market Context:

The tariff threat comes amid existing U.S. trade restrictions on Canada. In August 2025, Trump raised tariffs on Canadian goods, though most exports remain duty-free under CUSMA (Canada-U.S.-Mexico Agreement). Certain products including steel, copper, and some automotive components currently face U.S. tariffs.

Geopolitical Implications:

The warning follows Carney's speech at the World Economic Forum in Davos, where he urged "middle powers" to resist economic coercion from superpowers. Trump responded by suggesting Canada join the U.S. instead.

Bottom Line:

This development introduces significant uncertainty for U.S.-Canada trade relations and could impact cross-border supply chains, particularly in the automotive and agricultural sectors. The threatened 100% tariff represents a substantial escalation that would effectively halt most Canadian exports to the U.S. if implemented.