In late August 2026, a striking narrative began to crystallize across the North American policy and media landscape: that Canada’s trade diversification, particularly its renewed engagement with China amid the rupture with the United States, amounts to a geopolitical victory for Beijing and a strategic loss for the West.
This is the emerging narrative of those who view China as a common rival — and who see Canadian sovereignty as properly subordinate to Washington’s geopolitical convenience. The New York Times warned that China is “the real winner of the trade war with Canada,” arguing that Washington’s tariffs are inadvertently handing Beijing a historic opportunity to capture Canadian market share. The Washington Post framed the same dynamic through a different lens, noting that China is positioning itself as the defender of free trade that the United States once was, and that Canada’s January 2026 rapprochement with Beijing gave Prime Minister Carney the leverage to resist Washington’s demands.
Those in Canada hostile to China and resistant to Carney’s China policy reset eagerly echoed their US counterparts. A leading conservative Canadian think tank published a commentary framing China as “weaponizing the Canada-US trade rift” through “cognitive warfare” and “wedge strategies.” A national broadcaster aired a segment asking how China stands to benefit from a divided Canada-US relationship.
When voices across the political spectrum — those in the US who view US-China relations as a zero-sum rivalry and advocate containment, conservative hawks in Canada, and national public broadcasters — all converge on the same premise, it is usually because they share an unexamined assumption. That assumption is not articulated as a direct call for Ottawa to subordinate its sovereignty to Washington; rather, it operates as an unspoken premise that the US-Canada relationship, however fraught, is axiomatically superior to any alternative partnership — particularly one involving China.
The entire edifice rests on a causal inversion. The dominant narrative proceeds as follows: Canada diversifies trade → China gains → Canada loses sovereignty. But the actual causal chain, established by the consecutive actions of the past eighteen months, runs in the opposite direction. Washington deployed tariffs, sovereignty threats, and third-party trade vetoes. Canada exercised its sovereign right to diversify, expanding and deepening its trade relationships with China and other partners. And Canada regained sovereignty.
In January 2026, Prime Minister Carney visited Beijing — the first Canadian prime minister to do so in eight years — establishing a renewed strategic partnership and signing the China-Canada Economic and Trade Cooperation Roadmap. The concrete outcomes were swift and tangible: Canada replaced its 100 percent surtax on Chinese electric vehicles with a quota of 49,000 vehicles annually at a 6.1 percent tariff, scaling to 70,000 by 2030; China adjusted anti-dumping measures on Canadian canola and lifted retaliatory tariffs on seafood and pulses, restoring approximately three billion dollars in agricultural exports.
In July, the U.S. administration invoked Smoot-Hawley-era Section 338 authority to impose 50 percent tariffs on hundreds of Canadian goods. In August, negotiations collapsed when U.S. negotiators introduced last-minute demands, including a veto over Canada’s trade agreements with third countries. Carney recalled the delegation, declaring the U.S. proposals “unfair, economically illogical, and infringing on Canadian sovereignty.” On August 22, the 50 percent U.S. tariffs on roughly twenty billion dollars of Canadian goods took effect. Carney announced reciprocal retaliation effective September 8.
At no point in this sequence did China impose a tariff on Canada. At no point did Beijing threaten Canada with the “51st state” status. At no point did Xi Jinping demand veto power over Canadian sovereignty. To label China the winner of a rupture that Washington engineered is to perform intellectual gymnastics on America’s behalf.
A recent national broadcast segment asked how China could benefit from a divided Canada-US relationship. The question itself is the spin: it presumes both that the division is Canada’s doing and that any Chinese gain automatically negates Canadian interests. In reality, the division is the product of Washington’s own choices — the Section 338 tariffs, the annexation rhetoric, the negotiation breakdown triggered by demands for third-party trade vetoes, and the threat of 50 percent auto tariffs effective January 2027. Canada did not divide the relationship. Washington severed it.
When a leading public broadcaster frames the resulting trade diversification as benefiting China, it inadvertently functions as a transmission belt for Washington’s narrative. The segment is a microcosm of the “China winner” label dissected above: it treats Canadian sovereignty as illegitimate the moment it diverges from Washington’s preferences. The word “benefit” is loaded — it implies Canadian gains are somehow illegitimate unless they accrue to Washington’s satisfaction.
But consider what benefit actually means in practice. Canadian consumers gain access to affordable electric vehicles at 6.1 percent rather than a 106.1 percent tariff. Farmers and fishers regain three billion dollars in canola, lobster, crab, and pea exports. Energy producers sell crude to Asian markets at higher prices than to the U.S. market. Monetary sovereignty is enhanced through a central bank currency swap arrangement. These are Canadian benefits, not merely Chinese benefits. The spin’s error is to render invisible the Canadian beneficiary. A sovereign nation exercising its right to trade is not giving another country a victory — it is claiming its own.
For those who argue that China is weaponizing the rift through wedge strategies, cognitive warfare, and elite capture, virtually every act of Canadian trade diversification is pre-emptively criminalized. Trans Mountain oil exports to China become “geoeconomic leverage.” The 49,000-vehicle quota becomes “reward-heavy pressure.” The central bank currency swap becomes “clandestine diplomacy.” The foreign minister’s strategic dialogue with Wang Yi becomes “realignment tactics.” The framework’s fatal flaw is that it eliminates Canada as a sovereign actor. Every independent decision is labelled Beijing’s wedge. This is not policy analysis — it is intellectual pre-emptive surrender to Washington’s veto power.
The wedge framework draws its urgency from the foreign interference narrative that dominated Canadian politics during the 2022–2024 period. The specific intelligence and leak-driven allegations that fed the public conversation at that time — and which were amplified within the broader context of the Five Eyes and similar alliances — lent themselves to an overcorrection. A climate of heightened sensitivity took hold. Partly as a result, later institutional processes often validated the prevailing premises rather than providing a measured correction. Today, elements of the Canadian security and intelligence establishment remain cautious about, if not overtly resistant to, Prime Minister Carney’s China policy reset — reflecting an understandable but occasionally overapplied institutional reflex to equate any substantial Canadian engagement with Beijing as inherently compromising.
Yet the leap from “Beijing attempts to influence Canadian policy” to “therefore Canada must not sign a trade roadmap with Beijing” is not analysis; it is conflation. Managing foreign interference is a legitimate and necessary function of the state — one that Canada should resource appropriately through transparency registries, intelligence sharing, and robust legal frameworks. But the wedge framework goes further: it surrenders Canada’s trade sovereignty to Washington in the name of countering Beijing. That is not legitimate. One protects Canadian democracy; the other abolishes Canadian sovereignty. Conflating the two is precisely the intellectual error that has trapped Canadian China policy for the better part of a decade.
A telling indicator: the 2018 USMCA’s Article 32.10, the so-called poison pill, is defended by this school as necessary geoeconomic architecture. But Article 32.10 is precisely the institutionalization of Washington’s veto over Canadian sovereignty. To call it architecture is to mistake a cage for a house. As I argued in these pages and in recent Hill Times commentaries, Canada’s engagement with China is strategic sovereignty, not submission. The wedge framework inverts this: it recasts sovereignty as submission to Washington.
Chinese hawks deploy Australia’s automotive collapse as a cautionary tale: Chinese cars went from less than one in 250 to nearly one in three of new car sales in under a decade. The implicit prescription is that Canadians should continue paying premium prices for North American vehicles even when cheaper, comparable Chinese alternatives exist, because the geopolitical cost of letting China win the auto market outweighs the consumer benefit. This is a “Chinese competition tax” levied on Canadian consumers and businesses to fund Washington’s great-power contestation. The argument is essentially telling Canadians that their sovereignty must be subordinated to America’s geopolitical calculations.
Moreover, the Australia analogy proves the opposite of what it intends. North American integration was supposed to protect Canadian auto manufacturing. Instead, it left Canada utterly dependent on a partner who, when politically convenient, wields tariffs as weapons against his own ally. The Australia outcome is not a warning about what happens if Canada trades with China. It is a warning about what happens when a mid-sized economy allows its entire industrial base to hinge on the political moods of a great power. The diversification Carney is pursuing is not the cause of vulnerability — it is the remedy for a vulnerability that Washington itself has exposed.
The path forward is not a choice between Washington and Beijing. It is the assertion of a third position — what I have termed “flexible non-alignment.” This is not a departure from the Carney government’s stated direction; it is its intellectual scaffolding. In his January 2026 Davos address, Prime Minister Carney called on middle powers to develop “greater strategic autonomy” and adopted Finnish President Alexander Stubb’s framework of “value-based realism” — principled in commitments to sovereignty and human rights, pragmatic in recognizing that not every partner shares all of Canada’s values. He paired this with the doctrine of “variable geometry”: different coalitions for different issues, based on common values and interests. Flexible non-alignment is the scholarly articulation of exactly this posture.
Canada can cooperate with China on climate, energy, agriculture, and consumer goods; maintain NATO, NORAD, and Asia Pacific security commitments alongside Washington; and deepen diversification with the EU, Japan, Korea, and India. These are not contradictory — they are the definition of strategic autonomy, and they map precisely onto Carney’s own foreign policy architecture. This is the intellectual lineage of IPD’s Canada-China Brief, which has long argued for sectoral engagement, recognizing that Canada’s goal is not to make a simple choice between Washington and Beijing, but to ensure its policy choices are not unilaterally determined by either side.
When Minister LeBlanc declared that the idea the United States would have a word to say in the sovereign decision of Canada “wasn’t something we were prepared to consider,” he was not opening a door to Beijing — he was closing a door on Washington’s veto. That distinction is everything. Carney’s “value-based realism” and my “flexible non-alignment” converge on the same insight: a middle power that subordinates its trade sovereignty to a great-power patron — even a democratic one — ceases to be a middle power in any meaningful sense. It becomes a client. The whole point of middle-power doctrine, from Lester Pearson’s original formulation to Carney’s contemporary revival, is that medium-sized nations exercise agency precisely by refusing to be instruments of others’ strategies.
For Canada’s policy community, the implications are straightforward: third-party trade sovereignty is non-negotiable; diversification is risk management, not risk-taking; and security and economics must remain distinct domains. The poison pill must be retired — Article 32.10 is structurally incompatible with Carney’s strategic autonomy agenda. Sectoral engagement on climate, energy, agriculture, and public health remains the path forward.
Eight years ago, in a 2018 Globe and Mail commentary following the then-newly-concluded USMCA, I warned that Canada was “neither strong nor free” — the poison pill would hollow out Canadian sovereignty. Today, as Canada finally exercises its sovereign rights, the chorus from major media outlets is that China is winning.
But the label reveals the labeller’s true intent: what they oppose is not a Chinese victory, but a Canadian choice — the choice to act as a sovereign equal rather than a subordinate ally. A Canada that trades with China on its own terms is a Canada that is strong and free — exactly what the poison pill was designed to prevent. The “China winner” narrative is the poison pill’s rhetorical afterlife. Diversification is not defection. It is the debut of Canadian sovereignty on the world stage.
The views expressed in this article are those of the author alone and do not reflect the views or positions of the Institute for Peace & Diplomacy.
The Institute for Peace & Diplomacy is an independent, non-partisan foreign policy think tank that serves as an open and inclusive platform for a wide range of perspectives and does not adopt institutional positions on policy matters.
The Western powers have failed to effectively manage the increasing threat of proliferation in the Middle East. While the international community is concerned with Iran’s nuclear program, Saudi Arabia has moved forward with developing its own nuclear program, and independent studies show that Israel has longed possessed dozens of nuclear warheads. The former is a member of the treaty on the Non-Proliferation of Nuclear Weapons (NPT), while the latter has refused to sign the international agreement.
On Middle East policy, the Biden campaign had staunchly criticized the Trump administration’s unilateral withdrawal from the Joint Comprehensive Plan of Action (JCPOA), more commonly known as the Iran Nuclear Deal and it has begun re-engaging Iran on the nuclear dossier since assuming office in January 2021. However, serious obstacles remain for responsible actors in expanding non-proliferation efforts toward a nuclear-free zone in the Middle East.
This panel will discuss how Western powers and multilateral institutions, such as the IAEA, can play a more effective role in managing non-proliferation efforts in the Middle East.
Panelists:
– Peggy Mason: Canada’s former Ambassador to the UN for Disarmament
– Mark Fitzpatrick: Associate Fellow & Former Executive Director, International Institute for Strategic Studies (IISS)
– Ali Vaez: Iran Project Director, International Crisis Group
– Negar Mortazavi: Journalist and Political Analyst, Host of Iran Podcast
– David Albright: Founder and President of the Institute for Science and International Security
Closing (5:45 PM – 6:00 PM ET)
What is the current economic landscape in the Middle East? While global foreign direct investment is expected to fall drastically in the post-COVID era, the World Bank reported a 5% contraction in the economic output of the Middle East and North African (MENA) countries in 2020 due to the pandemic. While oil prices are expected to rebound with normalization in demand, political instability, regional and geopolitical tensions, domestic corruption, and a volatile regulatory and legal environment all threaten economic recovery in the Middle East. What is the prospect for economic growth and development in the region post-pandemic, and how could MENA nations promote sustainable growth and regional trade moving forward?
At the same time, Middle Eastern diaspora communities have become financially successful and can help promote trade between North America and the region. In this respect, the diaspora can become vital intermediaries for advancing U.S. and Canada’s business interests abroad. Promoting business diplomacy can both benefit the MENA region and be an effective and positive way to advance engagement and achieve foreign policy goals of the North Atlantic.
This panel will investigate the trade and investment opportunities in the Middle East, discuss how facilitating economic engagement with the region can benefit Canadian and American national interests, and explore relevant policy prescriptions.
Panelists:
– Hon. Sergio Marchi: Canada’s Former Minister of International Trade
– Scott Jolliffe: Chairperson, Canada Arab Business Council
– Esfandyar Batmanghelidj: Founder and Publisher of Bourse & Bazaar
– Nizar Ghanem: Director of Research and Co-founder at Triangle
– Nicki Siamaki: Researcher at Control Risks
The Middle East continues to grapple with violence and instability, particularly in Yemen, Syria and Iraq. Fueled by government incompetence and foreign interventions, terrorist insurgencies have imposed severe humanitarian and economic costs on the region. Meanwhile, regional actors have engaged in an unprecedented pursuit of arms accumulation. Saudi Arabia and the United Arab Emirates have imported billions of both Western and Russian-made weapons and funded militant groups across the region, intending to contain their regional adversaries, particularly Iran. Tehran has also provided sophisticated weaponry to various militia groups across the region to strengthen its geopolitical position against Saudi Arabia, UAE, and Israel.
On the other hand, with international terrorist networks and intense regional rivalry in the Middle East, it is impractical to discuss peace and security without addressing terrorism and the arms race in the region. This panel will primarily discuss the implications of the ongoing arms race in the region and the role of Western powers and multilateral organizations in facilitating trust-building security arrangements among regional stakeholders to limit the proliferation of arms across the Middle East.
Panelists:
Luciano Zaccara: Assistant Professor, Qatar University
Dania Thafer: Executive Director, Gulf International Forum
Kayhan Barzegar: Professor and Chair of the Department of Political Science and International Relations at the Science and Research Branch of Azad University
Barbara Slavin: Director of Iran Initiative, Atlantic Council
Sanam Shantyaei: Senior Journalist at France24 & host of Middle East Matters
The emerging regional order in West Asia will have wide-ranging implications for global security. The Biden administration has begun re-engaging Iran on the nuclear dossier, an initiative staunchly opposed by Israel, while also taking a harder line on Saudi Arabia’s intervention in Yemen. Meanwhile, key regional actors, including Qatar, Iraq, and Oman, have engaged in backchannel efforts to bring Iran and Saudi Arabia to the negotiating table. From a broader geopolitical perspective, with the need to secure its energy imports, China is also expected to increase its footprint in the region and influence the mentioned challenges.
In this evolving landscape, Western powers will be compelled to redefine their strategic priorities and adjust their policies with the new realities in the region. In this panel, we will discuss how the West, including the United States and its allies, can utilize multilateral diplomacy with its adversaries to prevent military escalation in the region. Most importantly, the panel will discuss if a multilateral security dialogue in the Persian Gulf region, proposed by some regional actors, can help reduce tensions among regional foes and produce sustainable peace and development for the region.
Panelists:
– Abdullah Baabood: Academic Researcher and Former Director of the Centre for Gulf Studies, Qatar University
– Trita Parsi: Executive Vice-President, Quincy Institute for Responsible Statecraft
– Ebtesam Al-Ketbi: President, Emirates Policy Centre
– Jon Allen: Canada’s Former Ambassador to Israel
– Elizabeth Hagedorn: Washington correspondent for Al-Monitor
Military interventions, political and economic instabilities, and civil unrest in the Middle East have led to a global refugee crisis with an increasing wave of refugees and asylum seekers to Europe and Canada. Moreover, the COVID-19 pandemic has, in myriad ways, exacerbated and contributed to the ongoing security threats and destabilization of the region.
While these challenges pose serious risks to Canadian security, Ottawa will also have the opportunity to limit such risks and prevent a spillover effect vis-à-vis effective humanitarian initiatives in the region. In this panel, we will primarily investigate Canada’s Middle East Strategy’s degree of success in providing humanitarian aid to the region. Secondly, the panel will discuss what programs and initiatives Canada can introduce to further build on the renewed strategy. and more specifically, how Canada can utilize its policy instruments to more effectively deal with the increasing influx of refugees from the Middle East.
Panelists:
Erica Di Ruggiero: Director of Centre for Global Health, University of Toronto
Reyhana Patel: Head of Communications & Government Relations, Islamic Relief Canada
Amir Barmaki: Former Head of UN OCHA in Iran
Catherine Gribbin: Senior Legal Advisor for International and Humanitarian Law, Canadian Red Cross
In 2016, Canada launched an ambitious five-year “Middle East Engagement Strategy” (2016-2021), committing to investing CA$3.5 billion over five years to help establish the necessary conditions for security and stability, alleviate human suffering and enable stabilization programs in the region. In the latest development, during the meeting of the Global Coalition against ISIS, Minister of Foreign Affairs Marc Garneau announced more than $43.6 million in Peace and Stabilization Operations Program funding for 11 projects in Syria and Iraq.
With Canada’s Middle East Engagement Strategy expiring this year, it is time to examine and evaluate this massive investment in the Middle East region in the past five years. More importantly, the panel will discuss a principled and strategic roadmap for the future of Canada’s short-term and long-term engagement in the Middle East.
Panelists:
– Ferry de Kerckhove: Canada’s Former Ambassador to Egypt
– Dennis Horak: Canada’s Former Ambassador to Saudi Arabia
– Chris Kilford: Former Canadian Defence Attaché in Turkey, member of the national board of the Canadian International Council (CIC)
– David Dewitt: University Professor Emeritus, York University
While the United States continues to pull back from certain regional conflicts, reflected by the Biden administration’s decision to halt American backing for Saudi Arabia’s intervention in Yemen and the expected withdrawal from Afghanistan, US troops continue to be stationed across the region. Meanwhile, Russia and China have significantly maintained and even expanded their regional activities. On one hand, the Kremlin has maintained its military presence in Syria, and on the other hand, China has signed an unprecedented 25-year strategic agreement with Iran.
As the global power structure continues to shift, it is essential to analyze the future of the US regional presence under the Biden administration, explore the emerging global rivalry with Russia and China, and at last, investigate the implications of such competition for peace and security in the Middle East.
Panelists:
– Dmitri Trenin: Director of Carnegie Moscow Center
– Joost R. Hiltermann: Director of MENA Programme, International Crisis Group
– Roxane Farmanfarmaian: Affiliated Lecturer in International Relations of the Middle East and North Africa, University of Cambridge
– Andrew A. Michta: Dean of the College of International and Security Studies at Marshall Center
– Kelley Vlahos: Senior Advisor, Quincy Institute
The security architecture of the Middle East has undergone rapid transformations in an exceptionally short period. Notable developments include the United States gradual withdrawal from the region, rapprochement between Israel and some GCC states through the Abraham Accords and the rise of Chinese and Russian regional engagement.
With these new trends in the Middle East, it is timely to investigate the security implications of the Biden administration’s Middle East policy. In this respect, we will discuss the Biden team’s new approach vis-à-vis Iran, Yemen, Saudi Arabia, and Israel. The panel will also discuss the role of other major powers, including China and Russia in shaping this new security environment in the region, and how the Biden administration will respond to these powers’ increasing regional presence.
Panelists:
– Sanam Vakil: Deputy Director of MENA Programme at Chatham House
– Denise Natali: Acting Director, Institute for National Strategic Studies & Director of the Center for Strategic Research, National Defense University
– Hassan Ahmadian: Professor of the Middle East and North Africa Studies, University of Tehran
– Abdulaziz Sagar: Chairman, Gulf Research Center
– Andrew Parasiliti: President, Al-Monitor
