Responding to Trump’s tariff barrage, Canada pivots from continental nostalgia to global dealmaking.
This article appears in the September 2026 issue of Global Finance Magazine.
Following President Donald Trump’s reelection in 2024, something extraordinary occurred, not seen since the War of 1812. The president not only took aim at Canada as a potential annexation target, but also breached his own USMCA trade deal by imposing punitive tariffs on the country to the north (among many others).
This prompted Canadians to turn away from their traditional focus on continental trade and pursue deals with other, friendlier markets (and, in protest, take liquor from the U.S. off their shelves).
The Liberal Party’s electoral victory soon after, and Mark Carney’s ascension as prime minister, expedited the process. Responding to the newly hostile environment, the new PM pledged to double Canada’s exports by 2035, diversify foreign trade, and reduce reliance on what was, and still is, Canada’s largest trading partner.
Canadian Prime Minister
“The old relationship we had with the United States, based on deepening integration of our economies and tight security and military cooperation is over,” he said. On another occasion, he was even more pointed: “Our relationship with the United States will never be the same as it was, even though, in the new protectionist world, we have the best trade deal of any country.”
That was then. Of course, now a war of words has become a full-blown trade war. With Canada backing away from what it considered a bad deal, the U.S. added tariffs to autos, auto parts, and aluminum, beginning January 2027, as a punishment for breaking off recent talks. Canada retaliated with tariffs of its own ranging from 15% to up to 50% on many American goods. As Carney stated at a news conference, “You’re at war when you are attacked. And we were attacked.”
A Strategic Reorientation
But a trade reorientation for Canada made sense on its own, some experts say. About four-fifths of the world’s economic activity occurs outside the U.S., much of it in Asia, according to the Fraser Institute, a nonpartisan Canadian think tank. “These facts suggest Canadian policymakers are right to emphasize the importance of expanding trade with non-U.S. markets,” it concluded.
Carney, accordingly, has been crisscrossing the globe, cutting deals with countries including India, China — where it reduced tariffs on electric vehicles, against U.S. wishes — and the United Arab Emirates, and has engaged with ASEAN members on a possible free trade agreement. All this is occurring, incidentally, as he continues to pursue tariff reduction with the U.S. and salvage as much of the free trade Canada has enjoyed with its neighbor to the south as possible.
This past summer, Maninder Sidhu, Minister of International Trade of Canada, established a new Strategic Exports Office and a Strategic Exports Advisory Council. The aim is to bring together diplomatic, commercial, and financial experts to help break down global trade barriers and open doors for Canadian businesses.
The new bodies “mark a decisive step toward doubling our exports to non-U.S. markets,” he said, “and they give Canadian businesses the whole-of-government support they need to compete and win around the world.” Goods exports to non-U.S. markets are up about 17% from 2024 to 2025, an increase of C$33 billion (US$24 billion), Sidhu’s office said. To some observers, the pivot is not only something to navigate but also an opportunity for the world’s 11th-largest economy, according to the International Monetary Fund.
In the long term, Canada’s economy could expand its manufacturing base and raise its standard of living.
Joel Kranc is a contributing writer based in Canada.