Mark Carney says Canada’s relationship with China is at a turning point. But it more accurately resembles a Rubik’s Cube, where each move to solve one problem scrambles the rest of the puzzle.

Sino-Canadian relations took a major hit beginning in 2018, when China detained the two Canadian Michaels 1,000 days. In the past year, tensions have worsened: Canada imposed a 100 per cent tariff on Chinese electric vehicles in October of 2024, with the goal of jumpstarting Canadian production. China levied 100 per cent canola oil tariffs in retribution.

Carney, of course, has been doing his level best to court Beijing as part of a broader effort to diversify Canada’s trade partnerships and reduce Canada’s economic dependence on the US. This past fall, he snagged a 40-minute meeting with Chinese President Xi Jinping on the sidelines of the APEC Summit in Gyeongju, South Korea—the first such encounter between the leaders of the two countries in eight years. No deals came out of the meeting, but Carney accepted President Xi’s invitation to visit China in 2026. So where do these shifting dynamics lead in the coming year?

In one scenario, there’s a major breakthrough between Canada and China, driven by the crisis in the U.S.. After trade talks with Trump collapse, Washington imposes sweeping new tariffs, and the Canadian economy goes into freefall. American automakers shut down assembly plants in Oshawa, Windsor and Oakville, and Japanese manufacturers follow suit, moving their production south of the border. As Trump’s tariff tsunami wreaks economic havoc, millions are thrown out of work, not just in the auto industry, but also in Canada’s lumber, agricultural and manufacturing sectors.

Carney will be forced to make a strategic calculation: if the U.S. won’t play ball, Canada must look elsewhere for an economic lifeline. He’ll........

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