'We have a lot to lose': Will Trump's visit to China threaten Carney’s diversification?

WASHINGTON, D.C. — U.S. President Donald Trump is in Beijing this week for a high-stakes summit with Chinese President Xi Jinping — their first meeting of 2026 after a year of tariff escalation and just months after Prime Minister Mark Carney’s own trip to China.

The talks begin on Thursday on issues ranging from Iran and Taiwan to trade.

Carney has said nothing publicly but will be watching for signs of a new balance on trade. The question for Ottawa is whether progress at the Xi-Trump summit undermines Carney’s recent efforts to diversify Canadian export markets because any thaw in U.S.-China relations could come at Ottawa’s expense.

Beijing and Washington “are setting the table … and you know who’s on the menu?” asked Stephen Nagy, senior fellow at the Macdonald-Laurier Institute and politics professor at the International Christian University. “The Canadians, the Japanese, and the South Koreans.”

“We have a lot to lose if the summit goes in a positive way for the U.S., and we have a lot to lose if China is able to secure some flexibility on the Taiwan issue,” he said.

So what will be discussed, and what are the implications for Canada?

The summit was planned by Treasury Secretary Scott Bessent and his counterpart in China, so the summit will likely favour economic issues over foreign policy.

Expect modest agreements on “low-hanging fruit,” said Dominic Chiu, senior analyst at Eurasia Group.

Likely outcomes include Chinese commitments to buy more U.S. exports, including soybeans, and possibly beef and energy.

More news about creating a U.S.-China Board of Trade, a proposed U.S. mechanism for managing trade between the two countries, is likely. But Chiu describes this as “old wine in new wineskins,” a rebranding of a pre-existing trade-negotiation structure.

Reza Hasmath, a politics professor at the University of Alberta, also expects a big announcement about aircraft sales.

“It’s not coincidental that Boeing’s CEO is there,” he said. “I suspect Beijing’s going to offer to purchase Boeing aircraft.”

Some trade watchers also anticipate an extension to the rare-earth truce, the one-year agreement made in Busan last year to stabilize critical mineral supply.

But Nagy says Trump wants more than an extension — “durable guarantees about a steady supply of rare earth materials from China” to reduce reliance on China’s dominance in rare-earth processing.

While unlikely this week, any such deal, Nagy said, would be bad for Canada because it would weaken Ottawa’s use of rare earths to “curry favour with the United States and the Trump administration.”

Little movement is expected in other high-tech areas.

One of the red lines for the U.S., said Jake Werner, director of the East Asia Program at the Quincy Institute for Responsible Statecraft, is concessions on “any of the established export controls or regulations regarding advanced technology and especially AI.”

Finally, while Beijing is expected to push for a moratorium or a delay on U.S. arms sales to Taiwan, that is another area where little action is expected from Trump.

Chiu says Xi will also push on the U.S. position on Taiwan, but that Trump is unlikely to budge — though some inside the beltway still fear a disastrous gaffe.

The other hot topic? Iran. Trump has sought Xi’s help in ending the war in Iran and easing tensions in the Strait of Hormuz, despite his comments Wednesday about not needing Beijing’s help.

“China will try to avoid appearing to pressure Iran in any way that would seem to support the United States,” said Colin Tessier-Kay, program manager with Hudson Institute’s China Center, noting that Beijing wants to preserve ties with Tehran and its broader position in the Middle East.

But while the U.S. and China talk security, the real pressure on Canada is coming from trade.

A deal for China to buy more U.S. soybeans would likely reduce imports from South America and other suppliers, including Canada.

“If China commits to purchasing more soybeans, LNG, and oil, obviously our market share is going to be reduced,” Hasmath said.

“The big picture is that Carney’s diversification strategy is going to get a test.”

If exports fall, said Nagy, “Carney’s diplomacy with China in January really has come to nothing.”

“Hopefully, we’re not going to be sold out.”

As for EVs, trade watchers don’t expect Trump to broach the subject of Carney’s EV deal with Xi.

“Canada is less likely to come up as a topic of conversation,” Chiu said, adding that the summit is unlikely to impact this summer’s Canada-U.S.-Mexico Agreement review.

“I think regardless of what happens during the summit … the U.S. is going to continue to deal bilaterally with Canada and Mexico,” he said.

Nagy painted a different picture.

“If there’s a big change — if Trump can secure the agricultural purchases and investments…,” he said, “that may create the conditions where he can force a much steeper cost to renewing the USMCA.”

If the summit leads to the U.S. allowing Chinese EV investment in America — however unlikely — it could even reshape the North American auto landscape, undermining Canada’s unique positioning as a bridge market. That would eliminate the strategic advantage for Chinese firms to operate through Canada.

Beyond immediate trade impacts is the fear of a developing G2 world. Nagy says he’s concerned the summit and subsequent meetings could further the idea of the U.S. and China setting up a Group of Two as dominant global powers.

This is the biggest fear for all middle powers, including Canada … and that would mean “we lose our strategic autonomy and have to choose between a China partner or a U.S. partner. That means we follow their rules — that’s not good,” he said.

If that happens, the question then will turn to whether a country like Canada can find a place within that distribution of power to establish itself as a high-value sector, Werner said.

Chiu is less concerned by rhetoric about a “G2” and says the real takeaway is that “the U.S. is increasingly seeing China as an equal at a competitive level.”

But it “implies a sort of dual hegemony,” Chiu said. “And that’s not the image that China wants to depict itself in.”

The middle powers, meanwhile, would have to choose, he noted, pointing to both a security and economic element.

“No matter how badly Canada-U.S. relations deteriorate, Canada is firmly part of the U.S.-led security architecture,” he said.

On the economic side, it’s more nuanced.

“Canada will have to make a decision on how much to expose itself to each country, the U.S. and China, in specific sectors.”

For less sensitive sectors, there’s less of a political obstacle for Canada to diversify its trade away from the U.S.

“When it comes to more sensitive sectors that touch the military industry or the defence industry, for example, Canada would likely still keep China at arm’s length.”

That leaves Canada walking a fine line — economically needing to diversify, but strategically tied to Washington.

National Post

Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark nationalpost.com and sign up for our newsletters here.