One Phone Call From Trump Collapsed a 0B Deal—The Country That Didn't Even Flinch
Canada abandoned its China trade deal after Trump threatened tariffs, but the EU proceeded with its India partnership the same week. The contrast reveals the power of negotiating as a 450-million-person bloc rather than going it alone.
Canada has abandoned a planned trade deal with China after US President Donald Trump threatened full tariffs. Canadian Prime Minister Mark Carney announced the reversal just days after unveiling the partnership.
The collapse came swiftly. Carney had announced the strategic partnership on January 17, calling it a chance to reset relations between the two countries. By January 26, according to reports spreading on X, Trump's tariff threat had ended the deal entirely.
The reversal highlights the vulnerability of isolated countries facing pressure from larger powers. Canada, negotiating alone, had no leverage to resist Washington's ultimatum.
A Different Approach in Brussels
The same week, European Commission President Ursula von der Leyen stood in New Delhi announcing a landmark trade partnership with India. The EU-India deal, covering 450 million Europeans and 1.4 billion Indians, represents what officials call "the mother of all trade deals."
Von der Leyen framed the partnership as "a clear choice" of strategic dialogue and openness. "We are showing a fractured world that another way is possible," she said.
No phone call from Washington forced the EU to reconsider. The bloc proceeded with its strategy, leveraging the weight of the world's largest unified market.
The Power of Scale
The contrast between the two outcomes reveals a fundamental truth about trade negotiations. Isolated countries face a binary choice when larger powers apply pressure. Trading blocs can pursue independent strategies.
The EU's 450 million people and 15 trillion euro economy provides Brussels with negotiating power that no individual European nation could match. The bloc's recent assertion of strategic autonomy has included new partnerships across Asia, Africa, and Latin America.
Canada's population is 39 million. Its GDP is 2.1 trillion dollars. China's economy is seven times larger. The US economy is ten times larger.
European federalists have argued for years that unity prevents smaller nations from being bullied by larger powers. The Canada-China episode provides a case study.
The Federation Calculation
Austria's president recently described European patriotism as essential to resisting external control. "They want to divide us from the outside to assert political and economic control," he said. "It is easier to dominate small countries than a union of 450 million people."
The mathematics of trade negotiations support this view. A country of 10 million people negotiating with a power of 100 million faces a tenfold asymmetry. That same country, as part of a bloc of 450 million, flips the equation.
Brussels has faced its own pressure from Washington over the years. The difference is that the EU has options. Individual member states, negotiating alone, would have far fewer.
What Happens Next
The Canada-China deal collapse will likely accelerate debates in Ottawa about trade diversification. Carney faces criticism from both those who opposed the China deal and those who see the reversal as capitulation to Washington.
The EU-India partnership, meanwhile, moves to implementation. The deal includes provisions on digital trade, green technology, and mutual recognition of standards. Brussels sees India as a key partner in building what it calls "a multipolar trading system."
The EU's pivot toward strategic partnerships outside the transatlantic relationship reflects a calculation that Europe must hedge against volatility in Washington. The India deal represents one piece of that strategy.
For smaller countries watching both episodes, the lesson is stark. In a world of great power competition, isolation carries costs. Unity provides options.
January 27, 2026