Opinion Middle power diplomacy: Is US threat forcing Canada to fall back on China?

The contours of the deal — wherein Canada reduced its punitive 100 per cent tariff on Chinese electric vehicles (EVs) to a mere 6.1 per cent in exchange for restored market access for Canadian canola and seafood — reflect a sophisticated application of economic statecraft. It is the behaviour of a middle power employing strategic hedging to ensure survival in a world where great power alignment no longer guarantees economic security.

However, Ottawa has spent the preceding months restoring ties with New Delhi, inviting it to the G7, forming a tech trilateral with Australia, and charting a new roadmap for the relationship. As Canada embraces China, should New Delhi be anxious?

For the better part of a decade, Ottawa and Beijing were locked in a diplomatic deep freeze, defined by hostage diplomacy involving the Two Michaels and substantiated reports of election interference by Canada’s Hogue Commission. Canada partnered with the US in its economic sanctions and contained Chinese investments in North America. Yet, in a stroke of pragmatism, Prime Minister Carney has chosen to compartmentalise these profound security grievances to secure an economic lifeline.

This pivot is fundamentally driven by the structural disintegration of the North American economic consensus. In signing a deal with Beijing, Ottawa is responding to the existential uncertainty radiating from Washington. With Canada’s auto and energy sectors heavily dependent on the US, Trump’s universal tariffs and the looming 2026 CUSMA review have transformed this reliance into a vulnerability. Faced with a hegemon that views trade as a zero-sum weapon, Ottawa is pivoting to China not out of preference, but out of absolute necessity — seeking a strategic pressure valve to mitigate the risks of American economic coercion.

In recent months, Canada–India ties have also witnessed a “renewed momentum”. Foreign Minister Anita Anand’s visit to New Delhi and the signing of the Australia–Canada–India Trilateral on Science, Technology, and Innovation (ACITI) suggested a return to normalcy after the bitter fallout of the Nijjar controversy. However, the fact that Carney visited Beijing before New Delhi signals a clear hierarchy of urgency. While India represents a long-term “foundational” partner for talent and technology in Canada’s strategic calculus, China remains the immediate economic hedge against US protectionism — an answer to Canada’s liquidity crisis. A bare look at trade statistics explains this itinerary: China is Canada’s second-largest trading partner, while India lingers at the tenth spot. China offers immediate scale; India offers future potential.

Ottawa has decided that it can simultaneously investigate Beijing for interference while selling its canola to Chinese markets. This confirms the structural logic currently reshaping the Canada–India equation. Where the relationship was once paralysed by the inability to insulate economic interests from the volatility of diaspora politics, it is now settling into a paradigm where these distinct tracks proceed in parallel. It signals to New Delhi that the Carney administration is fully capable of executing this duality. American protectionism is effectively subsidising Chinese diplomatic re-entry into the West. For US allies, the choice is no longer between democracy and autocracy, but between economic diversification and industrial stagnation.

As Canada engages with China, India must recalibrate its reset with Canada, employing conditions, not constraints, to enable engagement rather than inhibit it. While New Delhi should promptly operationalise the ACITI trilateral to secure critical mineral supply chains, it should demand strict end-user verification on lithium and cobalt, ensuring that Canadian resources do not bleed back into Chinese supply chains — a concern that Ottawa, in its bid to balance both powers, will essentially share.

Ultimately, Carney’s pivot proves that in 2026, survival trumps ideology. Canada has shown that it is willing to walk a tightrope between a protectionist US and a complex China. It is time India engaged Canada not only as a fellow democracy, but as a resource-rich, pragmatic partner.

Bhagat is an Assistant Professor and Gupta a Research Candidate at the Centre for the Study of the Americas, School of International Studies, JNU