Are China and Venezuela at the Heart of US-Canada Trade Strife?

It has been more than a week since Canada walked away from a trade deal that the United States claims would have been the best in the world. Ottawa said it was dismayed by a French language provision. Washington trade negotiators chuckled at the misunderstanding and shrugged. Put simply, Canada needs an agreement far more than America does.

But what has been omitted from US-Canada trade strife are two parties: China and Venezuela. These nations will eventually prove pivotal to $900 billion in bilateral trade. In fact, Beijing and Caracas may already be.

Heavy Crude Feeling in Venezuela

President Donald Trump announced in an August 28 Truth Social post that he has agreed to secure a majority of Venezuela’s proven 65 billion barrels of crude oil.

US officials coordinated with Venezuelan government officials and will use a "partnership" with unnamed private businesses to implement the agreement. "This Transaction will greatly strengthen the already growing relationship between Venezuela and the United States,” Trump wrote on his social media platform.

"This Historic Transaction MORE THAN DOUBLES American Oil Reserves, greatly increases our Oil Supply, and will substantially lower Gas Prices for all Americans, long into the future, while helping to continue to set Venezuela on a course toward Tremendous Success and Great Prosperity," Trump said.

This comes months after the United States attacked Venezuela and captured Nicolás Maduro, Venezuela’s then-president, along with his wife, Cilia Flores. It also comes as Americans grapple with $4-a-gallon gasoline and the Strategic Petroleum Reserve falling to its lowest level since the 1980s.

It is a major moment for the world's largest economy and energy superpower. The country is producing approximately 14 billion barrels per day, gradually gaining control of the Strait of Hormuz and the Strait of Malacca, and facilitating the abolition of the Organization of the Petroleum Exporting Countries. Now the United States has access to a massive oil reserve in its backyard.

This has vast implications for Canada. The United States imports about four million barrels of oil per day from the Great White North. Like Venezuela, Canadian energy firms produce heavy crude, which requires intensive refining. So, instead of dealing with its northern neighbor, the United States can saunter a few miles south of its border and pick up some oil to satisfy its ferocious energy appetite.

Whether Prime Minister Mark Carney is a victim or not is a moot point. The reality remains: Canada’s distinct advantage in trade deliberations no longer exists.

Carney Can Xi It a Mile Away

In the months succeeding Justin Trudeau, Carney went on a foreign adventure, visiting various leaders worldwide, from Europe to Asia. One of these individuals was Chinese President Xi Jinping.

Carney went to Beijing in January 2026 to reset bilateral relations and announce a new “strategic partnership,” despite calling China the nation’s biggest security threat. He declared that China will help usher in a “new world order,” something that the White House likely frowned upon.

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Ottawa has extended some maple syrup to China. A key concession was the import of Chinese electric vehicles, which some provincial leaders questioned. US officials warned that these cars could not enter the United States, as they could pose a national security threat. Ottawa waved off these worries.

On top of this, Washington has expressed concern surrounding the issue of transshipments. This is when Chinese goods are rerouted to third parties to avoid tariffs and restrictions. In other words, if Canadian steel and aluminum are really Chinese steel and aluminum in disguise, it would counter the measures employed by the US administration. The White House released a report this summer accusing dozens of nations, including Canada, of helping bring Chinese goods to global markets.

This could also explain why Washington is apprehensive about Canada striking trade deals with the world’s second-largest economy.

If Treasury Secretary Scott Bessent is the market whisperer, then Trade Representative Jamieson Greer is the scion of international trade. Canadians received more information from Greer on his CNBC and CBC appearances than from their own government. His remarks about what transpired between the US and Canada made far more sense than what emanated from the Prime Minister’s Office.

Due North, Due South

Canada is slowly losing its hand in trade talks with the United States. After removing automobiles, crude oil, and perhaps maple syrup from the equation, the only thing Canada has left is its heavily subsidized lumber industry. With high tax rates, a ballooning budget deficit, and the lowest GDP per capita among OECD nations, the only thing Carney has left when facing the public is “Orange Man Bad” – and this could be enough for the Liberal Party to continue having a stranglehold on power.