Canadian Prime Minister Mark Carney is accelerating efforts to reshape Canada’s trade landscape by forging new partnerships with China and other nations, but his ambitions face a stark reality: Canada still depends overwhelmingly on the United States for its exports. Carney’s strategy, seen as a response to the unpredictability of U.S. trade policy under President Donald Trump, reflects a broader global push to diversify trade ties amid rising geopolitical tensions.
Last week, Carney took a bold step by signing a trade agreement with China, positioning Canada as a potential leader in a new global trading order. The move marks a significant shift from Canada’s traditional trade focus and comes as Trump’s tariffs and foreign policy moves have disrupted longstanding economic relationships. The White House’s aggressive posture, including threats to Greenland and increased tariff measures, has intensified the urgency for countries like Canada to seek alternatives to a U.S.-centric trade model.
Carney, a former governor of both the Bank of England and the Bank of Canada, won last year’s election promising to build new economic alliances to help Canada withstand U.S. pressure. Ahead of the World Economic Forum’s annual meeting in Davos, he embarked on a global tour, visiting countries that Canada has historically overlooked. In Doha, Carney emphasized that many multilateral trade institutions and rules-based systems are being eroded, including by the United States, and argued that Canada and like-minded nations should pursue “plurilateral” deals involving smaller groups of countries.
Canada’s Foreign Minister Anita Anand told Reuters in Doha that Canada is prepared to step up and lead in this volatile moment, acting as a bridge between the European Union and Pacific Rim nations. “We will make sure that we are bringing countries to the table who will assist in this role,” Anand said.
But Canada’s economic reality is a major constraint. While the European Union relies on the U.S. for just over 20% of its goods exports, Canada sends nearly 70% of its exports south of the border. Export Development Canada senior economist Prince Owusu said that reducing Canadian exports to the U.S. by 10% would require doubling exports to major economies such as China, Germany, France, Mexico, Italy and India — a difficult task given the size and structure of global markets.
Carney has set a target to double Canada’s non-U.S. exports over the next decade. Trade experts say achieving that goal will require a heavy reliance on China, which is currently Canada’s second-largest trading partner. However, some analysts warn that moving too quickly toward China could create long-term economic instability. William Pellerin, partner and co-head for international trade at law firm McMillan, said that Chinese manufacturers could flood the Canadian market across many categories, raising concerns about dependency and domestic competitiveness.
Canada’s trade relationship with the U.S. remains dominant despite signs of slight shifts. Official data show that Canada’s share of exports to the U.S. fell to its lowest level outside the COVID-19 pandemic years in October, though the U.S. still accounted for 67.3% of all exports. Canada also continues to send 90% of its crude oil to the United States, even as the government seeks to expand energy sales to Asia. Economists note that the U.S. share of Canadian exports is unlikely to decline sharply in the near term, particularly as companies await the outcome of ongoing negotiations over the U.S.-Mexico-Canada trade agreement.
Carney has already expanded Canada’s diplomatic and trade outreach. He became the first Canadian prime minister to visit Qatar and the first to visit China since 2017. In Beijing, he described China as a more predictable partner than the U.S. and is expected to visit India soon after both countries agreed to restart stalled trade talks.
Canada has also concluded trade deals with Ecuador and Indonesia and signed investment agreements with the United Arab Emirates. Trade Minister Maninder Sidhu said the government will next focus on the Philippines, Thailand, Mercosur and Saudi Arabia, as well as India. Sidhu told Reuters that Canada typically signs one trade agreement per year but is aiming to accelerate that pace, underscoring the urgency of diversifying trade in an increasingly unstable global economy.
