China’s chief trade negotiator, Li Chenggang, recently came to Canada for important talks. He co-led the Joint Economic and Trade Committee meeting in Ottawa, where both sides discussed ways to boost trade relations.

Strengthening Economic Ties

The talks aimed to find practical ways to enhance the economic relationship between China and Canada. Both countries agreed to keep communication open to ensure progress. China is ready to resolve any differences with Canada through effective actions and positive discussions. This visit highlights a commitment to strengthen and grow the trade partnership. The recent meetings in Ottawa suggest that relations between China and Canada are stabilizing. This is a positive sign for key sectors, as it can reduce risks. Although there were no major breakthroughs, the focus on practical dialogue lowers the chance of new tariffs soon. This development helps ease the uncertainty that has affected some Canadian stocks throughout 2025. We believe this situation will lead to less volatility for Canadian assets with strong ties to China. Traders might explore strategies like selling puts on the S&P/TSX 60 ETF or specific commodity producers. After experiencing high volatility during trade disputes in early 2025, a return to stability seems likely.

Opportunities In Trade Relations

This is particularly important for our commodity markets, especially in agriculture and potash. Bilateral trade fell by nearly 5% year-over-year in the first half of 2025, but a recovery could lead to increased shipments to China, which has historically imported over 3 million tonnes of Canadian potash each year. We expect renewed interest in futures contracts for these products. Improved relations may also support the Canadian dollar, which has been below the 0.73 USD mark during much of the third quarter. Enhanced trade flows could help the dollar break out of this range, making call options on the CAD/USD currency pair an appealing strategy. We are keeping an eye on a shift back to levels seen in late 2024. There are also opportunities with options on Canadian companies in the transportation and natural resources sectors that depend on Chinese demand. Over the past year, these companies faced higher hedging costs due to political uncertainties. With improving relations, these costs are likely to decrease, potentially benefiting their stock prices. Create your live VT Markets account and start trading now.

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