Macro Crossroads | The "New World Order" for Canada, and Many More Countries

Prof. Zhu Ning

Macro Crossroads is a column by Prof. Zhu Ning, Senior Macro Strategist at Primavera Capital Group. In this series, he offers perspectives on the macroeconomic trajectory of China and the global economy, technological and industrial developments, and key policy shifts.

Canadian Prime Minister Mark Carney visited China in mid-January and secured what he described as a “preliminary but landmark” strategic partnership with China. He is the first Canadian Prime Minister to have visited Beijing in almost a decade, with the trip leading to one of the largest new partnerships that his administration has established since taking office last year. The partnership is widely considered an inflection point in the bilateral relationship, following a prolonged period of tension marked by the Huawei Meng Wanzhou incident in 2018 and tariff disputes in 2024.

Despite being a neighbor and historically close ally of the U.S., Canada’s position reflects concerns held by many other major trading partners about the impact of sudden tariffs being imposed by the U.S., which buys about 70 percent of Canada’s exports. With the latest campaign by President Trump against Denmark and the EU over Greenland, Canada also has additional reasons for concern on top of trade issues.

Canada’s pivot may prove to be a significant milestone in the disruptive era of change that the global system is experiencing. Countries are being compelled to find new ways to protect their inherent national interests and recalibrate their positions between China and the U.S., the two greatest powers in the global economy. Prime Minister Carney addressed this emerging trend directly at the World Economic Forum in Davos, saying that the U.S.-led post-WWII world order is falling apart and “not coming back”.

President Donald Trump’s initial reaction to Canada’s partnership with China provided an additional example highlighting this new era of constant disruption. Asserting at first that the U.S. “doesn’t need” Canadian products soon after the partnership was announced, President Trump stated “If you can get a deal with China, you should do that”, calling it a “good thing”. Less than a week later and following a speech by the Prime Minister in Davos, President Trump reversed his position and threatened to penalize Canada with a blanket 100% tariff if it agreed to a trade deal with China.

This dynamic may explain why Canada is recalibrating its position in the “new world order”, a path that many other countries may begin to follow. Prime Minister Carney highlighted that Canada enjoys a “candid and consistent dialogue” with China that has led to a “more predictable and effective relationship”. It is striking to witness that dialogue and negotiations – which the U.S. established as the foundation for resolving conflict in the post-WWII global order – are now being replaced by unilateral demands and coercion by the same country.

Faced with an uncertain outlook for the global system, governments have an inherent need to hedge and diversify their partnerships. Canada is now actively diversifying its trade relationships, a strategy many other countries have also pursued through their supply chains, security pacts, and foreign reserves. There is no doubt that the path forward will not be easy, and the Carney administration has much to work through before a full trade deal can be formalised. It is also certain that the U.S.’s own attitude and policy will have considerable influence on the outcome of Canada’s efforts to deepen trade ties with other partners, as it does for many other countries.

Nonetheless, the wheels are turning. We will likely witness more significant state visits and trade deals along these lines during 2026. As this article was going to press, China’s Ministry of Foreign Affairs announced that UK Prime Minister Keir Starmer will visit China on January 28. In a new era of “variable geometry”, where alliances and economic frameworks are increasingly flexible and non-uniform, countries value and require stability and predictability more than ever. Engaging in a variety of multilateral pacts with a diverse group of partners across the world seems to be the only viable solution for uncertainty.

About Prof. Zhu Ning

Ning is Senior Macro Strategist at Primavera Capital Group and Professor of Finance at the Shanghai Advanced Institute of Finance (SAIF), Shanghai Jiao Tong University. A top expert on behavioral finance and the Chinese economy, he is a member of the Academic Committee of the China Capital Market Society. Previously, Ning held senior positions at Lehman Brothers and Nomura Securities. He is the author of The Enemy of the Investor, The Friend of the Investor, and China’s Guaranteed Bubble.  Ning holds a bachelor’s degree from Peking University and a Ph.D. from Yale University.