Canada’s trade wake-up call could become a dream come true: diversification is no longer optional

The Canada–U.S. trade relationship isn’t going anywhere, nor should it. But the mental model that has governed Canadian trade policy has to change.

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For decades, Canada’s trade strategy could be summarized in one word: convenient.

This country sits next to the world’s largest consumer market, shares a language, a border, and enough cultural overlap that most Canadian exporters never had to learn a second one (besides French, if they also want to do business in Quebec). Three-quarters of Canada’s exports go south. It has been, by any measure, a comfortable arrangement—rather like living next door to a very large, very wealthy relative who buys everything you produce, and never quibbles about the price.

Until, of course, they do.

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Canada has perfectly good trade agreements—CETA with Europe, CPTPP across the Indo-Pacific—that remain dramatically underutilized. The reason isn’t indifference; it’s economics. Shipping to Hamburg or Yokohama costs more, takes longer, and requires market knowledge that most small and mid-sized Canadian firms simply don’t have. The U.S. market remains the path of least resistance, and paths of least resistance have a way of staying well-worn. And American companies and consumers have always liked Canadian products. Tell a CEO in Austin, Texas, she can buy a Canadian product or a European one, and the choice is an easy one.

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But, there’s also the uncomfortable truth about what Canada actually sells. Its export profile skews heavily toward commodities: oil, minerals, grains, lumber. These are things the world needs, but they’re not what advanced Asian or European markets are clamouring for. If Canada wants to compete seriously in those markets, it needs to show up with more than raw materials. That means investing in value-added processing, clean technology, agri-food innovation, and the kind of digital and professional services that travel well across time zones. Diversification and industrial strategy are the same conversation, not two different ones.

And then there’s China—the elephant in every trade diversification room. Canada can’t simply replace U.S. dependence with Chinese dependence. The political, security, and human rights considerations are real, and the coercive trade tactics Canada has already experienced make “more China” a complicated answer at best. Diversification has to mean a genuine portfolio of partners, not a different single bet.

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Europe wants reliable, low-carbon energy, and responsibly sourced critical minerals. The Indo-Pacific wants safe food, quality education, and infrastructure expertise. Southeast Asia is building out—cities, grids, supply chains—and Canadian engineering, finance, and professional services have strong reputations there. These aren’t marginal opportunities; they’re significant ones that Canada has been slow to pursue at scale. I have been in countless meetings in Europe where the executive told me “we need to focus more on Canada”.

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The world is reorganizing its supply chains around trusted partners. Canada—stable, rule-of-law, democratic, with the natural resources the energy transition requires—is exactly the kind of country that middle powers and major economies want to do business with right now. That’s a window. But windows don’t stay open indefinitely.

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What’s needed now is a government and a business community willing to think in decade-long horizons: investing in trade infrastructure, export financing, diplomatic capacity, and the market intelligence that helps Canadian firms walk into a room in Hanoi or Frankfurt and actually close a deal.

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[Edit to add 'Opinion' to the headline.]