China Gains from US-Canada Trade War, Aiming for Strategic Victory

China is seeking to capitalize on the diplomatic and economic benefits arising from the escalating trade war between the United States and Canada. As the US imposes tariffs on its allies, China is positioning itself as a 'guardian of free trade' and is accelerating trade relations with Canada and other countries.

Starting September 8, Canada will impose retaliatory tariffs on approximately 700 US products worth CAD 27.6 billion (about USD 20 billion), responding firmly to US tariffs. Canadian Prime Minister Mark Carney declared, "We are at war with the United States." This makes Canada the second country, after China, to retaliate against US tariffs.

China has welcomed Canada's countermeasures. The state-run Global Times described Canada's response as a 'Chinese-style counterattack,' asserting that it not only protects national interests but also upholds the stability of global supply chains and the fairness of international trade.

In fact, Canada has been strengthening its trade relations with China in anticipation of US tariff pressures. Earlier this year, Carney visited China, the first Canadian prime minister to do so in nine years, signaling a thaw in relations that had cooled after Canada detained Huawei executive Meng Wanzhou in 2018 at the request of the US. There are indications that Chinese President Xi Jinping may visit Canada next month, marking the first visit by a Chinese head of state in about 16 years.

Amid this reconciliation, China has reopened its market to Canadian canola seeds, beef, and lobster, while Canada has agreed to lower tariffs on Chinese electric vehicles and apply the most favored nation tariff rate to an annual quota of 49,000 electric vehicles, enhancing economic cooperation between the two nations. The Washington Post noted, "Given the intensifying US tariff pressures, this deal appears to be prescient."

The US has strongly criticized Canada's expansion of trade with China. On August 24, US Vice President J.D. Vance, during a visit to Maine, remarked, "It’s absurd that Canada favors products from China over those produced in Maine."

As the US-Canada trade war deepens, analyses suggest that China is reaping benefits. Zhu Yuan, a senior fellow at the Council on Foreign Relations, told the Washington Post, "We are literally giving up our global leadership. China doesn’t have to do anything to benefit from this situation."

China is not only focusing on Canada but is also accelerating trade relations with other countries. On August 21, China agreed to amend its free trade agreement with Switzerland and, earlier in May, eliminated tariffs on goods from nearly all African countries except one. It is also working to improve relations with India, which had cooled following border clashes.

Ali Wine, a senior China-US researcher at the International Crisis Group, told the Washington Post, "China aims to position itself as a stable counterbalance to a capricious superpower that imposes sudden tariffs on its allies and partners."

China is actively promoting this trend as a diplomatic and economic achievement. The state-run Global Times commented on August 26 that amid the escalating trade dispute between the US and Canada, "China's approach to international cooperation, based on principles of equality and mutual benefit, is becoming increasingly attractive." It noted that not only Canada but also several European Union member states, Australia, and ASEAN countries are seeking trade cooperation with China that aligns with their long-term interests.

However, it is important to note that China remains heavily reliant on the dollar-based global financial system and overseas markets, making it difficult to completely replace the US. The Washington Post analyzed that rather than overturning US financial and economic dominance overnight, China is benefiting from the US's own weakening of its global leadership.

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