Trade War Has No Winners, and Protectionism is a Dead End

In his speech at the World Economic Forum Virtual Event of the Davos Agenda, Chinese President Xi Jinping pointed out, “The problems facing the world are intricate and complex. The way out of them is through upholding multilateralism and building a community with a shared future for mankind.” When I presented my credentials last June, the Right Honourable Governor General Mary Simon also observed that in a complex and turbulent world, the future of all countries is closely linked. This echoes China’s proposal to build a community with a shared future for mankind.

No one wins a trade war or tariff war. Recently, the U.S. has levied an additional 10% tariff on imports from China on top of the previous 10% tariff imposed last month.The U.S. repeatedly pressured Canada and Mexico with the 25% tariff. The European Union, Brazil, India and others are also faced with U.S. tariff threats to different extent. The U.S. unilateral tariffs seriously violate the World Trade Organization rules and undermine the international trade order. It is a typical bullying act that damages the interests of others without benefiting the U.S. itself.

American economist Paul Krugman referred to the reasons for the U.S. to impose additional tariffs as the equivalent of “weapons of mass destruction in the runup to the invasion of Iraq.” “It’s not the real reason … [the U.S.] just wants to impose tariffs and assert dominance,” said Mr. Krugman. The U.S. tariff threats remind people of what former Canadian Prime Minister Pierre Trudeau said — living next to the U.S. is in some ways like sleeping with an elephant. One is affected by its every twitch and grunt. Nobody would like to stay with such a grumpy elephant.

According to a report by the Peterson Institute for International Economics, 92% of the cost of the tariffs imposed by the U.S. on China over the past five years has been shifted on to the American consumers through American importers. This is just a consumption tax. The International Monetary Fund also pointed out that a new round of U.S. tariffs will dampen investment and disrupt supply chains, bringing downside risks to the global economy.

Confronted with the growth predicament of the world economy, maximizing one’s own benefits at the expense of others’ interests or resorting to regressive actions of decoupling, disrupting supply chains and building small yards with high fences would only push up operational costs, sever economic links between regions and aggravate tensions and disputes. This would drag the world into a destructive spiral where fierce competition for a larger slice ends up in a diminishing pie. It has been proven by facts that protectionism is a dead end.

China always follows a basic open government policy. While China has benefited from opening up, it has been persistently advocating an inclusive economic globalization, advancing liberalization and facilitation of free trade, and upholding the multilateral trading system. Over the last decade, China’s negative list for foreign investment access has been significantly shortened. There are now zero restrictions on foreign investment in the manufacturing sector. China’s overall tariff level has been reduced to 7.3%. We have granted zero-tariff treatment across all tariff lines to all 43 least developed countries having diplomatic ties with China, becoming the first developing country and major global economy taking this initiative. In 2024, the number of newly-established foreign-funded enterprises increased by 9.9% year on year

China has always advanced its cooperation with Canada in a pragmatic way. With highly complementary economic structures and resource endowments, our two countries have had fruitful cooperation in various fields and the bilateral trade keeps increasing. Statistics show that in 2024, the trade volume between China and Canada totalled 133.3 billion CAD, a 6.1% year-on-year increase. China’s imports from Canada reached 66.8 billion CAD, up by 7.7% year on year.

China has a middle-income group of over 400 million people. It has been the world’s 2nd largest consumer market, the largest online retail market, and the 2nd largest import market, and will potentially become the largest consumer market in 10 years. The mega-sized Chinese market is as vast as the Pacific Ocean for Canadian businesses. Lululemon has become a new favourite for Chinese mid-to-high-end consumers. Arc’teryx army-green jackets have been sold out in the Chinese market. Tim Hortons has opened over 1,000 stores in China, and its iced coffee with avocado and coconut as well as the Sichuan spicy beef bagels that fuse Canadian branding with the Chinese food culture are highly popular. China is willing to maintain communication and consultation with Canada on the basis of correct perception of each other, mutual respect, seeking common ground while putting aside differences, and mutual benefit, so as to safeguard the order of economic and trade cooperation between our two countries and in the world, and bring more benefits to the two peoples.

The Chinese people often say, true heroes emerge in times of adversity. In China’s annual Two Sessions this year, Chinese Premier Li Qiang pointed out when delivering the Government Work Report that “Regardless of changes in the external environment, China will remain steadfast in its commitment to opening up, steadily expand institutional opening up, take the initiative to open wider and advance unilateral opening up in a well-ordered way and achieve new reform and development success through opening up.” The message is clear. We will continue to resolutely safeguard the WTO-centered multilateral trading system, broaden converging interests with other countries, and promote shared development for all.