January 23, 2026 | Carney Takes a Risky Gamble with a Bet on China

High Risk, High Reward: Carney’s China Gamble

Prime Minister Mark Carney has defied Washington by striking a sweeping trade deal with China—slashing tariffs on Chinese electric vehicles and dismantling long-standing barriers on agricultural exports.

Under the agreement, China will cut import levies on Canadian canola, canola meal, lobster, crab, and peas. In return, Canada will sharply reduce tariffs on Chinese-made battery-electric vehicles and welcome Chinese investment in Canadian EV manufacturing.

Carney framed the move as strategic diversification. Canada, he said, is “forging new partnerships around the world to transform our economy from one reliant on a single trade partner into one that is stronger and more resilient to global shocks.”

That is the theory. The risk is obvious.

The United States remains, by far, Canada’s most important trading partner, and the USMCA comes up for review in less than six months. Any perception in Washington that Canada is becoming a back door for Chinese manufacturing could invite retaliation—most painfully in autos and energy.

The electric-vehicle provisions are the most consequential. Canada will allow imports of up to 49,000 Chinese-made vehicles annually, rising to 70,000 over five years. Tariffs will drop immediately from 100 percent to just 6.1 percent.

This matters because China now dominates the global EV industry. In 2026, more than half of all vehicle sales in China will be electric. China accounted for roughly 40 percent of global vehicle sales in 2025—about 34 million units—compared with roughly 10 million in the United States.

Canadians may be unprepared for what is coming.

At this month’s Consumer Electronics Show (CES) in Las Vegas, Chinese manufacturers showcased a wave of high-quality, aggressively priced EVs. More than 900 Chinese firms exhibited—an unmistakable signal of industrial scale and confidence.

Consider a few examples. Xiaomi, best known for smartphones, now sells the YU7 electric SUV in China for under US$40,000. Geely, one of the world’s largest automakers—and owner of Volvo, Lotus, and Polestar—offers its M9 SUV for about US$28,000.

In 2026, Chinese manufacturers are expected to export more than eight million vehicles. Until now, almost none were destined for North America.

That isolation is costly. Less than 10 percent of vehicle sales in North America are electric drive, compared with more than 50 percent in China and roughly 25 percent in Europe. Chinese companies are not just cheaper; they are further down the cost curve and further ahead on innovation and manufacturing execution.

BYD, now the world’s largest EV seller, delivered roughly two million EVs in 2025—surpassing Tesla—and sells in more than 100 countries.

The era of dominance by Toyota, Volkswagen, and Detroit’s GM, Ford, and Chrysler is fading. China is now the undisputed leader in electric-vehicle manufacturing.

Carney has taken a substantial gamble. Aligning Canada with the world’s most formidable manufacturing engine—at precisely the moment Washington is tightening the screws on China—carries real geopolitical and economic risk.

But if Canada can secure investment, lower consumer prices, and accelerate EV adoption while navigating U.S. sensitivities, this could prove to be a rare North American opening into the future of global manufacturing.

High risk.
High reward.

Hilliard MacBeth

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson Wealth Limited or its affiliates. Richardson Wealth Limited is a subsidiary of iA Financial Corporation Inc. and is not affiliated with James Richardson & Sons, Limited. Richardson Wealth is a trade-mark of James Richardson & Sons, Limited and Richardson Wealth Limited is a licensed user of the mark. Richardson Wealth Limited, Member Canadian Investor Protection Fun

Hilliard MacBeth January 23rd, 2026

Posted In: Hilliard's Weekend Notebook

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