Canada has altered its tone on trade with China over the weekend after a threat from Donald Trump, while the UK and EU have jointly restated their commitment to green energy after the US President hit out at the UK’s policy on oil drilling in the North Sea.
Canada to swerve China deal
A shift in tone from Canadian prime minister, Mark Carney, may continue this week, after he said that Canada will not pursue a full free trade deal with China. He agreed a tariff reduction deal with Beijing earlier this month.
He said yesterday (25 January) that the US-Mexico-Canada Agreement (USMCA) means that Canada is required to notify the US and Mexico before striking trade deals with non-market economies. Carney said:
“We have no intention of doing that with China or any other non-market economy. What we have done with China is to rectify some issues that developed in the last couple of years.”
On a visit to China this month, Carney agreed to cut Canada’s 100% tariffs on Chinese electric vehicles (EVs) in return for reductions on tariffs imposed by China on some Canadian goods, including canola oil, pork and seafood. The EV tariff had been imposed alongside a similar measure by the US.
The assurance on a deal by Carney comes after Trump threatened a 100% tariff on Canadian goods should it strike a free trade agreement with China. He wrote on his Truth Social platform that if Carney “thinks he is going to make Canada a ‘Drop Off Port’ for China to send goods and products into the United States, he is sorely mistaken”.
“China will eat Canada alive, completely devour it, including the destruction of their businesses, social fabric, and general way of life. If Canada makes a deal with China, it will immediately be hit with a 100% Tariff against all Canadian goods and products coming into the U.S.A.”
Clean energy ‘Europe’s only route to prosperity’
UK energy secretary, Ed Miliband, and EU energy commissioner, Dan Jørgensen, have co-published an editorial in Politico arguing that Europe must remain committed to green energy, despite recent remarks by Trump on the UK’s energy policy.
It has been published to coincide with a meeting of European ministers in Hamburg to pledge to build 100 gigawatts in offshore wind projects.
The two argue that “both Britain and Europe have paid a heavy price for our exposure to the roller coaster of international fossil fuel markets”, and that reduced dependence on fossil fuels gives the continent greater independence. They add:
“Britain and the EU are committed to building Europe’s resources of homegrown clean power, looking to increase our energy security, create well-paid jobs, bring down bills and boost our industrial competitiveness, all while tackling the climate crisis to protect future generations.”
Last week, in his speech at the World Economic Forum in Davos, Trump said that the UK had “500 years” of oil and gas reserves remaining in the North Sea:
“The UK produces just one third of the total energy from all sources that it did in 1999 – think of that, one-third – and they’re sitting on top of the North Sea, one of the greatest reserves anywhere in the world, but they don’t use it, and that’s one reason why their energy has reached catastrophically low levels, with equally high prices.”
EU eyes India wine market
The EU is looking to compensate for flagging European wine consumption in its trade talks with India. The negotiations are in the final stages, and a deal could potentially be signed next week.
At present, the EU sells more wine to Iceland (population 400,000) than to India (population 1.4 billion). Brussels hopes that the impending deal could lower the 150% tariffs placed by India on European wines.
European wine consumption has dropped from 30 litres per person per year in 2005 to around 20.6 litres in 2024, according to Eurostat. Currently, only 0.5% of European wine exports go to India, though instability in the transatlantic relationship could increase the pressure to secure better access to this market.
Reuters reports this morning, meanwhile, that the deal could also include a major shift from India on imports of European cars, with a reduction from tariffs of 110% to 40% planned. This is expected to be followed by a further reduction to 10%.
Other stories
- The UK government is mounting a “charm offensive” with China despite subsidised Chinese goods having “the potential to imperil key sectors of our economy, in particular the energy system”, according to remarks by trade minister Liam Byrne featured in a Politico report
- EU member nations have given the final approval for a total ban on import of Russian gas by late 2027, though Hungary has said it will appeal the measure at the European Court of Justice
- The US is to invest an additional US$1.6bn into rare earths as it continues efforts to diversify away from China
Other dates for the diary
- Monday: North Sea Summit in Hamburg
- Tuesday: US formally withdraws from the Paris Climate Agreement for a second time
- Wednesday: US interest rate announced
- Thursday: UK PM, Sir Keir Starmer, begins three-day visit to Beijing
- Friday: Deadline for US to pass bill to avoid another government shutdown
- Saturday: End of US Federal Reserve board member Stephen Miran’s term
- Sunday: Costa Rican elections and Opec+ meeting
