Trump’s USMCA exit threat seen pushing Canada into China’s arms ‘as a hedge’

Analysts expect Ottawa to diversify trade as future of North American trade pact remains uncertain, while a US departure would ‘hit Canada like an earthquake’

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Canadian Prime Minister Mark Carney appears alongside President Xi Jinping at the Great Hall of the People in Beijing on January 16. Photo: Reuters

Published: 8:00pm, 25 Feb 2026Updated: 8:25pm, 25 Feb 2026

A reported threat by US President Donald Trump to withdraw from the North American trade pact could push Canada closer to China, analysts say, even as his new global 15 per cent tariff has little immediate impact due to existing trade agreements.

Washington, Ottawa and Mexico City are set to renegotiate terms of the US-Mexico-Canada Agreement (USMCA) before a possible extension on July 1. Earlier this month, Bloomberg reported that Trump was quietly considering exiting the trade deal – negotiated during his first term to foster deeper economic integration – citing unidentified sources.

Weighing in on the potential impact, Salvatore Pinizzotto, co-founder and managing director at Xida Communications in Italy, said: “Canada would almost certainly accelerate selective diversification, and China would be part of that – not as a substitute for the US, but as a hedge.”

And Stephen Olson, a former US trade negotiator and a visiting fellow at the ISEAS – Yusof Ishak Institute, said that a US departure from the trade pact would “hit Canada like an earthquake”.

“While it’s a no-brainer for Canada to attempt to draw closer to China, sticking points remain in the Canada-China relationship, and it won’t immediately be hugs and kisses,” Olson noted. “Recent signs of warming relations are positive but should not be exaggerated – there’s still a long way to go.”

Canada has been rebuilding diplomatic ties with China after years of strained relations. Last month, they embarked on a new strategic partnership as Prime Minister Mark Carney visited Beijing. He announced a series of deals and suggested that Beijing was a “more predictable” partner than Washington.

Following Carney’s trip, China eased entry rules and allowed Canadian passport holders to travel to the country visa-free from February 17. China also resumed Canadian canola purchases, which had plunged last year amid tensions between the two nations.

The Canadian government will continue to look for opportunities to diversify trade, including with China

Kelvin Heppner, Canadian farmer

Kelvin Heppner, a farmer from the Canadian province of Manitoba, said there was an increased willingness in the nation for pragmatic approaches to trade with other countries, including China, as a result of Trump’s threats.

Trump’s USMCA exit threat seen pushing Canada into China’s arms ‘as a hedge’

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Analysts expect Ottawa to diversify trade as future of North American trade pact remains uncertain, while a US departure would ‘hit Canada like an earthquake’

Analysts expect Ottawa to diversify trade as future of North American trade pact remains uncertain, while a US departure would ‘hit Canada like an earthquake’