The spectre of a North American trade war is looming large as Canadian Prime Minister Mark Carney stands firm on a controversial new deal with China, despite a 100% tariff threat from US President Donald Trump.

In a high-stakes diplomatic poker game, Canada has agreed to lower tariffs on Chinese electric vehicles (EVs) in exchange for Beijing dropping barriers on Canadian canola and meat. Trump, furious at what he sees as a "backdoor" for Chinese goods into the US market, has threatened to slap a blanket 100% tariff on all Canadian exports.

"We Have No Intention of Backing Down"

Speaking from Ottawa, PM Carney (who took office in this 2026 timeline) insisted the deal is "entirely consistent" with the USMCA (United States-Mexico-Canada Agreement). "This deal rectifies issues that have developed... it is not a free trade agreement," he clarified.

The deal allows 49,000 Chinese EVs to enter Canada annually at a reduced 6.1% tariff. For Trump, this is a Trojan horse. For Canada, it's a necessary move to save its agriculture sector.

• The Threat: Trump warned on Truth Social: "If Canada makes a deal with China, it will immediately be hit with a 100% Tariff."
• The Stakes: Millions of jobs on both sides of the border depend on the seamless flow of goods.

As the rhetoric heats up, the world watches to see if the longstanding US-Canada alliance can survive the "America First" resurgence.