Canada Joins Pacific Allies as China Rattles the Taiwan Strait

Canadian warships joined the United States, the Philippines, Japan, Australia, New Zealand and France in the Balikatan 2026 exercises that wrapped up earlier this month, deepening Canada's profile in the Indo-Pacific just as China's People's Liberation Army responded with fresh naval drills east of the Luzon Strait. The juxtaposition underlines how Canadian defence and foreign policy choices are being shaped by tensions over Taiwan, even as the federal government continues to navigate a delicate trade and diplomatic relationship with Beijing.

The Balikatan exercises, held from April 20 to May 8, focused on enhancing interoperability among U.S. allies in the region and on developing a denial-based defence concept within what military planners refer to as the first island chain. Lessons from the war in Ukraine were integrated into the planning, including the use of drones, distributed maritime operations and the defence of contested coastal terrain.

What Canada contributed

Canadian warships participated in the Pacific exercises alongside vessels from the United States, the Philippines, Japan, Australia and France. The activities included anti-submarine warfare drills, fleet air defence exercises and at-sea replenishment training. The Royal Canadian Navy has steadily expanded its presence in the Indo-Pacific through Operation Horizon and related deployments.

Canadian participation in Balikatan reflects the broader thrust of the federal government's Indo-Pacific Strategy, which was launched in 2022 and has been updated under the Carney government. The strategy commits Canada to expanded diplomatic, economic and defence engagement across the region, including with key partners in Northeast Asia, Southeast Asia, South Asia and Oceania.

China's response

The People's Liberation Army Southern Theater Command conducted exercises east of the Luzon Strait in response to what Beijing described as the current regional situation. The drills are widely interpreted as a signal of displeasure with the scope and ambition of allied exercises that explicitly contemplate scenarios related to Taiwan.

President Xi Jinping has continued to identify Taiwan as the most important issue in U.S.-China relations and has reiterated Beijing's position that reunification with the island is non-negotiable. China has stepped up military pressure on Taiwan through more frequent air and naval incursions across the median line of the Taiwan Strait.

The Trump administration's approach to Taiwan has remained ambiguous in some respects, although U.S. officials have continued to provide significant military support to Taipei. Xi has reportedly warned President Trump of possible conflict over Taiwan during recent diplomatic exchanges.

Canada's Taiwan dilemma

Canada maintains a one-China policy and does not formally recognise Taiwan as an independent state. However, Canada has economic, cultural and people-to-people ties with Taiwan and has signed a Trade Cooperation Framework Agreement with the island in 2025. A review of next steps for that agreement is underway.

Taiwan's representative in Canada, Harry Tseng, has expressed concern that fear of upsetting Beijing is contributing to delays in finalising a fuller trade arrangement. The Canadian government has continued to engage with Taiwan on trade and other issues while managing the parallel relationship with China.

The Macdonald-Laurier Institute and other Canadian think tanks have argued for stronger Canadian support of Taiwan's resilience, including through diplomatic, economic and defence cooperation, framing the issue as part of a broader defence of the rules-based international order.

The China relationship

Canada's relationship with China remains complex and at times strained. Trade ties are significant, including Canadian exports of agricultural products, energy and natural resources to China, and Chinese exports of manufactured goods to Canada. Tensions over national security, foreign interference and human rights have shaped the political environment.

The Carney government has signalled an interest in engaging China on areas of mutual interest, including climate change and global health, while maintaining a clear-eyed approach to security concerns. Ottawa has continued to invest in measures to counter foreign interference, including through the new foreign agent registry framework and through expanded intelligence resources.

Indo-Pacific Strategy

The federal government's Indo-Pacific Strategy commits Canada to deeper engagement across the region, including expanded defence presence, increased diplomatic resources, more concerted trade promotion and intensified people-to-people ties. Implementation has been steady but, by the government's own acknowledgement, will require sustained commitment over many years.

The strategy positions Canada alongside key allies including the United States, Japan, South Korea, Australia and the Philippines, while also building relationships with India, the ASEAN states and Pacific island countries. The Royal Canadian Navy's continued participation in regional exercises is a tangible expression of that strategy.

Economic stakes

The Indo-Pacific represents a major share of global growth, trade and investment. Canadian economic engagement with the region includes significant trade in goods and services, education exports, tourism and investment flows. Diversifying Canadian trade away from over-reliance on the United States, a priority elevated by the Trump tariff regime, will require continued growth in Indo-Pacific markets.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership remains a key framework for Canadian trade with the region, and the federal government continues to consider new bilateral arrangements with selected partners.

Public opinion and the political conversation

Canadian public opinion on China has shifted significantly over the past decade. Polling consistently shows that Canadians view China less favourably than they did before the detention of Canadian citizens Michael Kovrig and Michael Spavor in 2018, the bilateral tensions over Huawei and the broader concerns about foreign interference that have surfaced in recent years.

At the same time, Canadians maintain interest in engagement with China on issues including climate change, global health and people-to-people ties. The challenge for Canadian policymakers is calibrating an approach that protects national security and democratic institutions while preserving channels for engagement on shared global priorities.

The political conversation about China in Canada has at times been heated, with debates about foreign interference, election security and the appropriate response to specific incidents drawing significant attention. Federal commissions of inquiry and parliamentary committees have explored these issues in depth, producing recommendations that the federal government has been working to implement.

The 2026 political landscape, with the Carney government in its first year and ongoing trade pressures from the United States, provides a particular context for the China conversation. Decisions about defence cooperation with Pacific allies, about trade with Indo-Pacific partners and about specific responses to Chinese actions will shape the trajectory of the relationship for years to come.

The Canadian-Asian diaspora

Canada is home to large diaspora communities from across the Indo-Pacific, including substantial Chinese, Filipino, Indian, Japanese, Korean, Vietnamese and Sri Lankan populations. These communities have deep ties to the region and contribute to Canadian engagement through economic, cultural and educational links.

The cross-strait tensions affect Taiwanese-Canadians, who have organised in support of Taiwan's democratic government and against pressure from Beijing. Filipino-Canadian communities have similarly engaged on issues including the South China Sea and the importance of regional security.

The military dimension

Canada's military presence in the Indo-Pacific has expanded in recent years, with multiple naval deployments, participation in exercises and engagement with regional partners. The federal government has committed to additional investments in maritime capabilities, including new surface combatants and submarines, that will enhance Canadian capacity to operate at distance.

Defence cooperation with key partners, including the United States through NORAD and bilateral channels, with Australia through AUKUS-adjacent arrangements and with Japan through enhanced strategic dialogue, will continue to be a focus of Canadian planning. The federal government has also been engaged on Five Eyes intelligence cooperation related to the Indo-Pacific.

The technology and supply chain dimension

The strategic competition between China and the United States, with Canada's allies on one side, has played out increasingly in technology and supply chains. Semiconductors, critical minerals, electric vehicles and clean technology all sit at the intersection of economic policy and national security, with Taiwan playing a central role in the global semiconductor industry.

Canada's economic engagement with Taiwan includes significant trade in semiconductors, electronics and machinery, with Taiwanese investment in Canadian operations growing in recent years. Disruption of cross-strait stability would have immediate and serious implications for Canadian supply chains, particularly in advanced manufacturing and technology sectors.

The federal government has been investing in supply chain resilience, including through critical minerals strategies, semiconductor research partnerships and trade promotion targeting like-minded partners. Provincial governments, including Ontario and Quebec, have been actively pursuing related industrial investments in advanced manufacturing.

For Canadian businesses with exposure to the Indo-Pacific, the geopolitical environment is increasingly part of operational planning. Companies are diversifying supply chains, considering nearshoring options and engaging more directly with government on questions of trade, investment and security policy.

What's next

Continued Canadian engagement in the Indo-Pacific is expected to include further military deployments, diplomatic visits, trade promotion and investment in regional partnerships. The federal government will need to balance engagement with China against support for partners facing Chinese pressure, including Taiwan and the Philippines.

Provincial governments, including British Columbia, are also engaged in Indo-Pacific relations through investment promotion, education exports and cultural exchange. Canadian universities, businesses and civil society organisations contribute to the broader fabric of engagement.

For Canadians, the Indo-Pacific represents both economic opportunity and security responsibility. The choices made in Ottawa, including how to balance engagement with great-power competition, will shape Canadian prosperity and security in profound ways over the coming decade.