Carney Charts New Course: Canada Inks China Deal, Declares Old World Order “Dead” at Davos
SYDNEY, 21 January 2026 – Canadian Prime Minister Mark Carney has used the World Economic Forum in Davos to deliver a blunt message: the post-war rules-based international order is over. The declaration follows his landmark visit to Beijing, where he secured a controversial trade agreement with China, marking a decisive strategic pivot for Ottawa as it seeks to reduce economic dependence on a volatile United States under President Donald Trump.
A “Strategic Partnership” Forged in Beijing
Prime Minister Carney’s visit to China, the first by a Canadian leader in nearly a decade, resulted in a new “strategic partnership” focused on energy, agriculture, and trade. The centrepiece is a tariff agreement that represents a significant break from coordinated Western policy.
Canada will allow up to 49,000 Chinese-made electric vehicles (EVs) into its market annually at a preferential tariff rate of 6.1 per cent, down from 100 per cent. In exchange, China has agreed to slash tariffs on key Canadian agricultural exports. Duties on canola seed will fall from roughly 85 per cent to around 15 per cent by March, while tariffs on lobster, crab, peas, and canola meal will be lifted until at least the end of 2026.
In a joint statement with Chinese President Xi Jinping, Carney framed the deal as adapting to “the world as it is, not as we wish it to be.” He outlined ambitions to increase Canadian exports to China by 50 per cent by 2030 and highlighted opportunities for Chinese investment in Canada’s energy grid and liquefied natural gas (LNG) sector.
Key Facts: The Canada-China Agreement
| Component | Details |
|---|---|
| Chinese EV Access | Up to 49,000 vehicles per year at 6.1% tariff (down from 100%). Cap may rise to 70,000 over five years. |
| Canadian Agri-Food Relief | Canola seed tariffs cut to ~15% by March 2026. Temporary removal of tariffs on lobster, crab, peas, canola meal. |
| Strategic Goals | Increase Canadian exports to China by 50% by 2030. Deepen cooperation in clean energy, finance, and technology. |
| Geopolitical Context | Seeks to diversify trade away from US amid Trump-era tariffs and threats (e.g., on Greenland). |
“The Rules-Based Order Is Dead”: Carney’s Davos Diagnosis
Speaking in Davos just days after returning from Beijing, Prime Minister Carney elaborated on the thinking behind his foreign policy shift. “The architecture, the multilateral system is being eroded—undercut,” he stated. “The question is what gets built in its place.”
He argued that the old system of global governance, centred on institutions like the World Trade Organisation, is fracturing. In its place, he envisions a “new world order” built on “purpose-built alliances” and bilateral deals between countries that align on specific issues, even if they disagree on others.
This pragmatic approach is driven by immediate pressures. The Trump administration’s imposition of sweeping tariffs, threats to annex Greenland, and demands for allies to pay billions for seats on foreign policy bodies have forced middle powers like Canada to reassess their strategies.
Reactions and a Domestic Balancing Act
The China deal has sparked fierce debate at home. Provincial leaders in agricultural regions like Saskatchewan have welcomed the tariff relief, while Ontario Premier Doug Ford has criticised the move as a threat to Canada’s auto sector.
Opposition leader Pierre Poilievre has accused Carney of a stark reversal, noting that as recently as eight months ago, the Prime Minister labelled China “the biggest security threat to Canada.” The government has defended the shift as necessary “pragmatism” in a changed world.
Internationally, President Trump has publicly shrugged off the Canada-China deal, while analysts view it as a clear signal of Ottawa’s attempt to carve out strategic autonomy between the two superpowers.
Global Finance in Flux: An Australian Parallel
Prime Minister Carney’s comments on the evolution of the global financial system find echoes in Australian developments. The private sector launch of AUDD, an Australian dollar-pegged stablecoin, and the Reserve Bank of Australia’s “Project Acacia” – a live pilot exploring tokenised asset settlement – exemplify the kind of innovation occurring outside traditional multilateral frameworks.
These projects highlight how nations and financial institutions are actively building new digital infrastructure, reflecting the systemic shift Carney described where coalitions develop solutions for “subsectors” of the global economy.
Frequently Asked Questions
Why is Canada making a deal with China now?
Canada’s economy is heavily reliant on trade with the United States. With the Trump administration pursuing aggressive tariff policies and making threats against allies, Ottawa sees an urgent need to diversify its trade partnerships to ensure economic stability.
What did Mark Carney mean by a “new world order”?
Carney argues the post-World War II system of international rules and institutions is breaking down. He believes a new, more fragmented system will emerge, built on bilateral deals and coalitions of countries that cooperate on specific issues like trade or climate, even if they are adversaries on other matters.
Is the US opposed to Canada’s deal with China?
Publicly, President Trump has not opposed the deal. However, US Trade Representative Jamieson Greer has warned Ottawa may regret it “in the long run.” The agreement marks a clear divergence from the previously coordinated Western approach to Chinese trade practices.