Tariff Truce Between U.S. and China Offers Cautious Optimism for Canadian Economy
Global stock markets surged on news of a 90-day pause in the U.S.-China trade war, but Canadian stakeholders are approaching the development with measured optimism, noting that the long-term implications for Canada remain uncertain.
The Canadian Chamber of Commerce called the truce “good news for global trade,” citing the heavy toll the trade war has taken on Canadian industries. “We’ll be monitoring the China-U.S. discussion closely in the months ahead, as the details of any final agreement will matter,” the Chamber said in a statement to Global News.
Similarly, the Retail Council of Canada welcomed the move, but with reservations. “We’re not popping the champagne just yet,” the Council stated, warning that the current 30% U.S. tariff continues to disrupt global supply chains and harm both American and Canadian consumers.
What’s New in the Trade War?
On Monday, U.S. President Donald Trump and Chinese officials agreed to reduce tariffs for a 90-day period. The U.S. slashed its tariff rate on Chinese goods from 145% to 30%, while China mirrored the reduction on U.S. imports, bringing its rate to 10%. Trump hailed the agreement as “a total reset with China.”
The temporary rollback follows high-level talks between American and Chinese delegations in Geneva over the weekend. “Neither side wants a decoupling,” said U.S. Treasury Secretary Bessent, emphasizing a shared goal of more balanced trade.
While the announcement injected a sense of relief into the markets, experts warn against mistaking this pause for long-term progress.
Limited Progress, Lingering Uncertainty
“Compared to where we were in December 2024, this is simply less bad—not necessarily good,” said University of Toronto economics professor Peter Morrow. “We’ve seen extreme tariff fluctuations in recent months, and this move only delays the uncertainty.”
Markets responded positively, with investors hopeful that a willingness to negotiate could mean recession fears are easing. Still, Morrow cautions that this truce might just be “kicking the can down the road.”
What It Means for Canada
The U.S.-China tariff reductions may offer indirect relief to Canadian businesses and consumers, particularly those reliant on global supply chains, such as dollar stores and retailers of low-cost goods. Higher Chinese export prices caused by previous tariffs had been passed along to Canadian shelves.
There’s also speculation that the truce could open a door for Canada. Prime Minister Mark Carney may view this as a signal that the U.S. is ready to negotiate, including on longstanding tariffs affecting Canadian exports.
“Carney might see this as the Trump administration seeking a face-saving exit strategy,” Morrow noted. “If you let Trump declare a win, both sides might walk away with minimal damage.”
However, no changes have yet been announced between Canada and the U.S., which still impose 25% tariffs on non-CUSMA compliant products, along with additional duties on steel, aluminum, and energy.
The Retail Council of Canada urges continued government action. “We’re encouraged by recent efforts in Washington, but resolving the Canada-U.S. tariff dispute could take time,” the Council said. “Meanwhile, the damage is ongoing.”
