Canada’s New Deals with China/Qatar: What are the Geopolitical Considerations Shaping the ICRG Risk Model?

Canada signed a historic strategic partnership with China on January 16, 2026, aimed at ending a punishing trade war.  Agriculture was the big winner, as it were, as China agreed to slash tariffs on Canadian canola seed from roughly 85% down to 15% by March. It will also remove “anti-discrimination” duties on canola meal, lobsters, crabs, and peas.

 In exchange, Canada eased its 100% surtax on Chinese electric vehicles (EVs). It will now allow up to 49,000 Chinese EVs into the country annually at a significantly lower 6.1% tariff.  Given that it is the average cost of an EV that prevents most Canadians interested from buying one, the introduction of the Chinese models should help ease these concerns as they are significantly cheaper than those offered by Tesla.

However, the deal with China was not hailed universally in the provincial capitals. While Prairie premiers called the deal a win for farmers, Ontario’s government and auto unions warned it could devastate the domestic manufacturing sector by allowing cheap, subsidized imports to flood the market.

Meanwhile, PM Carney is in Doha to elevate the bilateral relationship from “friends to allies”. The talks focus on securing generational investment from Qatar’s sovereign wealth fund for Canadian artificial intelligence, infrastructure, energy, and defense sectors. On energy alone, Canada is positioning itself as a reliable energy partner, seeking to scale up Liquefied Natural Gas (LNG) exports to Asian markets via Middle Eastern partnerships.

Some items to note: The Qatar Investment Authority recently acquired a 4% stake in Canada’s Ivanhoe Mines (September 2025). Canada has removed visa requirements for Qatari citizens to facilitate easier business travel. A new Qatar–Canada Joint Business Council was established in early January 2026 to serve as a permanent platform for trade dialogue.

Interestingly, President Trump thought the deal between Canada and China was fine. But this was not the sentiment shared by his administration’s trade and transportation officials.

For example, Jamieson Greer, the US Trade Representative, said the deal was “problematic,” noting that the US maintains high tariffs specifically to protect North American auto workers from Chinese competition. Additionally, US officials said that while Canada may allow 49,000 Chinese EVs annually, these vehicles will be strictly prohibited from entering the US.

The deal between Canada and China also complicates the upcoming 2026 review of the USMCA (United States–Mexico–Canada Agreement), as the agreement gives China a “wedge” to drive between Canada and the US at a time when the Trump administration is pressuring allies for regional unity against Beijing.

How have these developments affected our ICRG risk ratings?

The Canada–China “strategic partnership” will adjust the ICRG scores for external conflict, as it signals now a move toward a “pragmatic” relationship, which can lower immediate conflict risk scores while potentially increasing friction in alliance-based metrics with the US government.

In addition, much of Canada’s risk profile has been tied heavily to the American market. By securing major deals with China and Qatar, Canada is “recalibrating” its economic positioning. The ICRG series will track this shift to assess whether Canada is becoming more resilient to US policy shocks or more vulnerable to Chinese economic pressure.

Lowering tariffs on Chinese EVs and securing agricultural export access (canola tariffs dropped from 84% to 15%) provides “clear export upside” and predictable trade frames. These are key inputs for ICRG’s economic risk ratings, as they directly affect GDP growth and sector stability.

Finally, strategic ties with Qatar—specifically the focus on AI, infrastructure, and energy—provide new data for the ICRG’s Investment Profile risk metrics as these sovereign wealth fund commitments will help ease the relevant internal risk metrics affecting Canada’s ability to attract “generational investment” outside of traditional Western blocks.