- President Trump has cut off U.S. Trade talks with Canada after an anti-tariff ad featuring Ronald Reagan aired, calling it “fake” on Truth Social. Before talks collapsed, Canadian officials said Prime Minister Mark Carney was pursuing closer ties with China and may meet with President Xi Jinping at next week’s APEC summit. As China diversifies exports—now up 8.3% year on year despite U.S. Tariffs—markets remain calm. UBS’s Paul Donovan said past U.S.-Canada flare-ups have been short-lived but warned that the coming Trump-Xi meeting could pose greater risks for global trade.
President Trump has halted trade discussions with Canada due to an advertisement against tariffs that included Ronald Reagan. Should Canadian Prime Minister Mark Carney wish to express any grievances regarding his neighboring country to the south, he might have the opportunity to do so with Chinese President Xi Jinping as early as the upcoming week.
TL;DR
- President Trump halted U.S. trade talks with Canada after an anti-tariff ad featuring Ronald Reagan aired.
- Canadian Prime Minister Mark Carney is pursuing closer ties with China and may meet President Xi Jinping.
- China's exports are up 8.3% year on year despite U.S. tariffs, and markets remain calm.
- The upcoming Trump-Xi meeting poses greater risks for global trade than U.S.-Canada flare-ups.
Just hours ago, Trump posted on Truth Social, the social media platform he owns, stating that “all trade negotiations with Canada are hereby terminated.” This anger was triggered by a Canadian television advertisement that showed President Reagan, a figure revered by conservatives, discussing tariffs and trade barriers “hurt every American worker and consumer.”
While President Trump claimed the ad is “fake,” the Ronald Reagan Presidential Foundation said the ad “misrepresents” the radio address President Reagan made in 1987 on free trade.
Prior to the breakdown of discussions between Ottawa and Washington, Canadian representatives indicated in a background briefing that Carney is seeking a “strategic relationship” with China, which is America's primary rival on the world economic scene and its strongest adversary in the trade dispute.
Officials indicated Carney's desire to convene with The Chinese president during the Asia-Pacific Economic Cooperation summit in Gyeongju, South Korea, though no arrangements are finalized. The Canadian head of government, formerly the governor of the Bank of England, is eager to engage in discussions with leaders from various geopolitical regions, according to aides, but will explicitly outline the boundaries of cooperation between Canada and China.
Canada is certainly at liberty to foster ties with the global economy's second-largest player, thereby offering Beijing a valuable ally as it charts a new course in its dealings with The United States.
To date, Beijing has responded to President Trump's tariff proposals by engaging in negotiations and simultaneously broadening its trade relationships.
China's exports to the U.S. Saw a 27% decrease in September, marking the sixth consecutive month of double-digit drops for its formerly top market, as indicated by figures from The General Administration of Customs this month. Concurrently, exports to regions such as the European Union, which faces a 15% tariff from The White House, demonstrated robust expansion, contributing to an overall export increase to non-U.S. Destinations of 14.8%.
Exports have actually increased by 8.3% in September from the previous year, generating $328.6 billion, which represents the highest monthly earnings for 2025 to date, as the U.S. Market's influence wanes.
This situation arises just days before a planned encounter between President Trump and President Xi, who are also slated to convene at the South Korean summit. It follows fluctuating statements from The White House and Trump's warning of a 100% tariff on China in November.
The Ministry of Commerce in Beijing continued its firm rejection of the threat, noting: “Frequently threatening high tariffs is not the right approach to engaging with China. China’s position on a tariff war is consistent: We do not want one, but we are not afraid of one.”
Trump quickly reversed course, saying he didn’t want to “hurt” the Chinese economy and added he had a good relationship with President Xi. It’s also worth noting that, in addition to reducing America’s leverage by experimenting with its export markets, China maintains a stranglehold on the rare earth minerals that the U.S. Doesn’t have.
The impact
The shift in tone between the U.S. And Canada is not a major concern for economists. Paul Donovan of UBS informed clients earlier today that similar situations have occurred previously, though past disputes centered on particular Canadian government policies. This instance, however, appears to be sparked by political advertisements, potentially indicating a more complex resolution. Unlike previous times, there's no specific policy adjustment that can be made to reset the relationship.
“However, financial markets are likely to be muted in their reaction, for now. The trade negotiations do not cover all trade or even most trade between Canada and the United States.”
He added: “Despite the greater difficulties of engineering a U.S. Climb-down this time, past experience does suggest that these sort of issues are resolved before too long.”
Markets are more concerned about the ramifications of Xi and Trump’s meeting. “Increased uncertainty or antagonism in the Sino-U.S. Trade relationship would potentially have more serious economic consequences,” Donovan added.
Jim Reid from Deutsche Bank informed clients earlier today that the meeting's confirmation was “buoyed hopes of a détente between the world’s two largest economies. This would be the first in-person meeting between the two leaders since Trump returned to office in January and comes as the current 90-day U.S.-China tariff truce is due to expire on November 10.”