A 100% Tariff Threat Puts U.S.–Canada Relations on Edge
- CUPS Realty
- 2 hours ago
- 2 min read
U.S. President Donald Trump recently stated that if Canada continues to advance trade cooperation with China, the United States will impose 100% tariffs on all Canadian goods entering the U.S.
Canada–China Tariff Agreement in 2026
In early 2026, Canada and China reached a preliminary agreement in-principle to reduce tariffs and expand market access.
Key points include:
China plans to sharply reduce tariffs on Canadian canola seed by March 1, 2026, from nearly 84% to about 15%.
Canadian agricultural and seafood exports—including canola meal, lobster, peas, and crab—will no longer face additional tariffs through the end of 2026.
Canada will allow up to 49,000 Chinese-made electric vehicles per year to enter its market at an approximately 6.1% MFN tariff rate.
China will grant visa-free entry to Canadian travelers as a supporting measure.
U.S. and Canada Trade Positions
Trump argued that the agreement would turn Canada into a transit point for Chinese goods entering North America, harming Canadian industries.
Canadian Prime Minister Mark Carney stated that the arrangement is intended to resolve trade issues from recent years and is not a free trade agreement. He emphasized that a full free trade deal with China would violate the United States–Mexico–Canada Agreement (CUSMA), and Canada has no intention of pursuing such an agreement with any non-market economy.
Tariff Impact on Inflation and Supply Chains
Supply chain expert Jason Miller of Michigan State University warned that a 100% tariff on Canadian goods would significantly increase U.S. inflation, given U.S. reliance on Canadian oil, vehicles, and auto parts.
Although the Trump administration imposed a 35% tariff on Canadian goods last summer, products compliant with CUSMA rules are exempt. As of October, the effective average U.S. tariff on Canadian imports was about 3.89%.
Tariff Policy as a Negotiation Tool
Trump has repeatedly used tariff threats as diplomatic leverage. Even when such measures are not implemented, the statements alone have had tangible effects on trade negotiations.
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