U.S. President Donald Trump rained on Beijing’s parade this week, hiking across-the-board tariffs on Chinese goods a further 10 per cent (to a total of 20 per cent) as China’s most important political gathering kicked off, and imposing a punishing 25 per cent tariff on Canadian goods, with a lower rate for Canadian energy.
In response, Beijing applied 15 per cent counter-tariffs on American chicken, corn, cotton, and wheat, and 10 per cent tariffs on beef, dairy, pork, and other agricultural products.
Canada’s counter-tariffs, meanwhile, initially target C$30 billion worth of American goods. On Tuesday, a fiery Justin Trudeau, Canada’s outgoing prime minister, said in an address that “we will not back down from a fight,” adding “there are no winners in a trade war.”
Forty per cent of U.S. goods imports come from Canada, China, and Mexico. Experts say Trump’s tariffs amount to “a circular firing squad” and will hobble American businesses and raise costs for consumers.
The move will also likely push Canadian exporters away from the U.S. and towards markets in Europe and the Indo-Pacific. For example, on Tuesday, the CEO of Canadian mining giant Teck Resources said that Teck is now looking to sell zinc to Asia instead of the U.S.
U.S. Treasury Secretary Scott Bessent previously suggested that Canada and Mexico could dodge tariffs if they matched American tariffs on China — a proposal that Ottawa was reportedly willing to discuss.
Trade data released last week shows Canadian goods exports to China fell from C$31 billion in 2023 to C$30.25 billion in 2024.
Delegates gather in Beijing
China's Two Sessions, the twin meetings of the country’s ‘rubber-stamp legislature’ and its top political advisory body, began on Tuesday in Beijing, with close to 5,000 delegates gathering to discuss the Chinese economy, domestic innovation, and unrelenting U.S. tariffs.
A key conference in December singled out “boosting consumption” as Beijing’s top economic priority. Private consumption only accounts for around 39 per cent of China’s GDP, a figure significantly lower than, for example, the U.S. (68%), India (62%), or Canada (54%).
China’s finance minister, Lan Fo'an, has hinted repeatedly about running higher deficits, and party officials are expected this week to endorse a slightly higher deficit-to-GDP ratio of around four per cent (up one percentage point from 2024). Beijing is also expected to double down on its “moderately loose” monetary policy.
The escalating U.S.-China trade war will likely discourage any dramatic surge in government spending.
Pressure on private sector, promise of AI
Chinese Premier Li Qiang — Xi Jinping’s second-in-command — delivered the 2025 Government Work Report at the opening of the Two Sessions on Wednesday. It included Beijing’s five per cent GDP goal for the year ahead, the same target as last year, and the country’s economic and development priorities.
In advance of the Two Sessions, Xinhua, China’s state-news agency, dismissed the importance of the GDP figure, writing that “as China's economy shifts toward high-quality development, GDP is not the sole measure of the economy.”
Designed by: Chloe Fenemore / APF Canada
On February 17, Xi met with a group of Chinese tech executives, including Huawei's Ren Zhengfei and, in his first public appearance since disappearing from public view in 2020, Alibaba founder Jack Ma. Xi portrayed himself as a friend to the private sector — a debatable label given Beijing’s past detentions of business leaders and its broader crackdown on China’s tech industry — and vowed to “dismantle” business obstacles.
Artificial intelligence and the market-rattling success of Chinese AI startup DeepSeek will also loom large at the Two Sessions. State-controlled Global Times noted that 29 of China’s 31 provinces, autonomous regions, and municipalities listed AI as a “priority” in their own government work reports.
