Mark Carney is on a mission to trade with the world

On January 13th, after a remarkable ten days during which Donald Trump declared America’s dominance of the western hemisphere and the irrelevance of free trade with its neighbours, Canada’s prime minister, Mark Carney, set off for Beijing. It was the first trip—to Qatar and Switzerland after China—in his drive to drum up new foreign investment and trade. For months Mr Carney has believed that Mr Trump has changed the United States permanently, and that Canada, as its second largest trading partner and close ally, must adapt. As the tyres of Canforce One left the tarmac at Macdonald-Cartier airport in Ottawa, the days ahead promised opportunity for Mr Carney and Canada—and risk.

The former central banker will be happy to meet leaders of Qatar’s sovereign-investment fund. Bigwigs at the World Economic Forum in Davos will pose little challenge either. It is at his meeting with China’s president, Xi Jinping, that Mr Carney will have to perform a balancing act. China is Canada’s second-largest trading partner, but relations between the two countries have been glacial in recent years. Canada’s security agencies say China’s spooks actively interfere with Canada’s elections. More recently, Canada’s decision to join the United States in applying 100% tariffs on Chinese electric vehicles prompted China to reciprocate with levies on Canadian rape-seed oil and seafood.

But Mr Carney has managed to warm things up. The presence of Scott Moe, the premier of the rape-seed powerhouse of Saskatchewan, in the delegation suggests some hope of relief for Canadian farmers. But the biggest opportunity concerns hydrocarbons. Mr Trump’s takeover of Venezuela’s oil industry should create a gap in China’s supply. China had been buying Venezuelan oil at a discount, ferrying it back to its refineries in dark-fleet tankers. But the United States will control such flows. Canada’s heavy oil-sands crude is compatible with the Venezuelan stuff. Canadian officials reckon that the Chinese are interested in buying more.

Data from Kpler, a research firm, suggest that 40% of Canada’s seaborne crude exports went to China in 2025. That could easily rise if a proposed pipeline, from the Albertan tar sands to the west coast, were built. Mr Carney’s quest for investment in the pipeline is a goal of his trip. A Canadian official expects oil exports to China to go up. “China is looking ideally for reliable sources,” they say. “Venezuela is becoming less reliable and less cheap.”

How might America’s president react to a pact that sends more Canadian energy to his rival superpower across the Pacific? Mr Carney’s advisers seemed unperturbed by the risk of provoking Mr Trump. But they should be cautious, says Ian Burney, who negotiated trade agreements in Asia before serving as Canada’s ambassador to Japan. Mr Trump has his own agreement with China and he is probably going there soon to try to expand trade relations. “He made no bones about making a preferential deal with China and leaving countries like Canada to twist,” says Mr Burney.

America’s new National Security Strategy makes it clear that the United States expects to be the only superpower involved in the western hemisphere. One of the most overt objectives of the Venezuelan operation was to curb the presence of China and Russia in the region. “The National Security Strategy crystallises how difficult it will be for Canada to pursue an independent foreign policy with China,” says Vina Nadjibulla, vice-president of the Asia-Pacific Foundation, a Vancouver-based think-tank. “Everything Canada does will be scrutinised in Washington.”

But whether or not Mr Trump likes it, a rebalancing of trade between Canada, China and the United States is likely. Figures released by Statistics Canada, the national data service, show that only 67% of exports went to the United States in October. That figure, which was as high as 76% before Mr Trump’s tariffs, marks the lowest share of exports going to the United States since 1997, excluding the period of covid-19. In the same set of data, exports to the rest of the world jumped by 15.6%, a record high. Larger shipments of oil to China made up a striking portion of the rise.

Diversification is sensible—but not at the cost of Mr Carney’s key aim of clinching a deal with the United States to protect Canada’s access to the world’s juiciest market across its southern border. “Canada’s efforts to broaden its global customer base should complement, not undermine, the project of building a strong regional energy partnership within North America,” says Goldy Hyder, Canada’s chief business lobbyist. “The United States will remain Canada’s largest oil buyer.” ■