There presently exists a defining political disagreement in Canada between those who ache to retain Continentalism at all costs (re: Poilievre’s Conservatives) and those who perceive an irreparable and enduring rupture in trade relations between Canada and the USA (re: Carney’s Liberals). It makes for a more engaging politics than the typical pedestrian muddle.
In response to this ruptured understanding, Carney proposed to restructure the economy in October 2025, such that annual trade and services exports to non-American destinations would increase by $300B in ten years, nominally doubling from the current amount. Conservative pundits, relying upon a recent Fraser Report, itself a financially conservative and pro-American think tank, think “Mark Carney’s non-U.S. exports target far-fetched.”
Doubling non-US exports in ten years might seem like a pipedream if one does not consider compound interest. This target is merely 7.2% annual growth nominally. After accounting for 2% inflation, based upon government and central banker targets, this is merely a 5.1% increase annually.
The Fraser Report notes (p.2), “Canada’s merchandise exports to the United States jumped from $108 billion in 1988 to $206 billion by 1995, almost doubling (in nominal dollar terms) within the span of seven years.” The services component of Canadian exports more than doubled between 2014 and 2024 (March 2014: $9.235B; March 2024: $20.587).
Hence, I hardly think that this target is improbable and merely aspirational. Indeed, I suspect that Carney may have understated the likelihood. But let history be the true judge of such punditry, and let us then stone false prophets (LOL).
The Fraser Institute Fallacy
The Fraser Report’s claims are largely based upon the fallacy of what has been shall ever continue to be, facilitated by geographical proximity which reduce transportation costs, common language, and similar legal standards and business practices (p.3).
On the basis of trade patterns between 1999 and 2024, the Report found that “the total share of goods exported to the U.S. from Canada decreased only modestly, from 86.7% in 1999 to 76.3% in 2024.” This does not include services, in which presently the US share is only 50.2% ($109.3B out of $217.8B). In 2023, the US share was 53.2%, slightly higher in the years prior.
The Fraser Report does not “identify and evaluate policy measures that might reduce Canada’s high degree of trade dependence on the United States, particularly as an export market” (p.1). Considering that on both sides of the border, policy measures have already been and likely will continue to be instituted, which will reduce Canadian exports to the US, it makes the value of this Report dubious, at best.
For already, the US share of total merchandise exports has declined from 79.5% (Feb 2025), when Trump began his tariff campaign, to 66.4% in February 2024, this before the Iran War. (The higher than normal February 2025 share was extra loaded in anticipation of the coming tariff regime.) In this time, however, total merchandise exports to other non-American destinations increased from $14.3B (Feb 2025) to $22.3B (Feb 2026) on a monthly basis, a 50+ percent increase, consistent with a growing pattern in the last year. This growth, it must be admitted, is but low hanging fruit of any diversification efforts.
The Fraser Report and conservative pundits point out that Canadian governments have made periodic feints to diversify our trade patterns for 50 years (i.e. Trudeau Sr., Chretien) without much avail. But these seemed half hearted attempts to me at the time, especially compared to what Carney has achieved in this last year.
A smoker may know that his/her habit is detrimental to health and life all throughout life and make periodic feints to quit. But only when an X-Ray comes back, showing a tumor, might that smoker have serious resolve to quit. The peril of having over 20% of Canadian GDP dependent upon US exports has long been well known. But the Americans, until the last decade or two, operated upon a “first among equals” geopolitical principle. All allies benefit, even if America benefitted most by its rules-based liberal order. Consequently, allies became all too comfortable under their prosperous semi-vassalage to the U.S.
But when a geopolitical superpower feels its real loss of relative power and influence, it becomes less magnanimous, moving away from enlightened to unenlightened self interest, becoming self-serving and self-aggrandizing, duplicitous, even evil. Our own short Canadian history is witness to this dynamic of decadence with regard to the British Empire, the first to introduce concentration camps in the Boer War, making false promises to both Jews and Arabs during WW1, while conspiring to carve up the Middle East with France. Canadian and ANZAC abhorrence at the way the British conducted WW1, to which our semi-vassal states were subject, instigated further autonomy away from the UK (i.e. The Statute of Westminster, 1931).
Inadvertent Advantages of Still Being Hewers of Wood
Another analyst at the Fraser Institute, an American who works for the American right-wing think tank, Cato Institute, bemoans the natural cause-and-effect consequence of Trump’s tariff regime to American fortunes.
Yet the 50 per cent tariff and removal of the Canadian exemption in 2025 pushed major Canadian producers to divert exports to Europe. Aluminerie Alouette, North America’s largest smelter, shifted its European sales from 4 per cent to 57 per cent of production in a matter of months. Rio Tinto stopped selling in the U.S., and even Alcoa reduced cross-border shipments. The troubling consequence of this shift was increased U.S. reliance on Middle Eastern suppliers—the UAE and Bahrain together accounted for nearly one-quarter of U.S. unwrought aluminum imports—but these sources have now been disrupted because of the Iran conflict. With global demand for non-Gulf aluminum sky-high and Canadian smelters operating at full utilization, there’s little chance producers in Canada will redirect back to U.S. buyers in the near term.
Relevant to Canadian concerns, be damned American self-interest, the remarkable thing is how quickly Canadian aluminum companies, even one owned by Americans, could switch clients so quickly. Considering how wildly variable, US trade policies presently are and will continue to be for at least another 30 months, even this American understands that Canadian producers will not be soon returning to the US.
The advantage of still being a resource economy, at least from the perspective of exports, is that the market is global. If global supply and demand are in rough equilibrium, then the actions of one self-serving actor merely shifts trading patterns. This is not so true with other trade goods and services.
Commodities and refined commodities constitute about 40% of all Canadian merchandise exports. Build a few pipelines, even Canada’s greatest export type can be diverted from the US to new customers. Europeans are most willing to replace unstable Persian Gulf sources, for instance, with more secure and stabler Canadian sources, especially if it becomes coupled with defense contracts that replace American military contractors. Everybody wins but the Americans who are not at the table.
Conservatives in the Wilderness
Poilievre’s Conservatives would probably be competent managers of the nation in the style of Stephen Harper, certainly heads and shoulders above the inconsequential fop, Justin Trudeau. However, in the depths of their heart, Continentalist Conservatives still perceive that America is now what it was 50 years ago. Canadians could then go to Washington, placate American concerns, plea for amendments or exemptions, which it more or less acquired.
This is certainly not true of Trump’s America, which weaponizes its sizeable power and leverage, extorts its trading partners while deploying the lamest of pretenses, and openly humiliates those trading partners which they have just extorted. I do not believe, going forward, that American hubris will differ in kind after Trump, just in degree. America is not now the America that we knew in our youth.
Canadians, it seems, have no appetite for a semi-vassalage that is openly exploitative. They just might be willing to suffer a period of sacrifice while the nation undergoes necessary restructuring of its economic, military, diplomatic, and foreign policy to meet new realities.
This might also be Canada’s maîtres chez nous moment. Canada might have weaned off mother Britain after the First World War. But it seems that Canada merely began to suckle at the breast of America instead. Those breasts are drying up. There just might be a youthful appetite in this country to finally strike it on our own, to get out from under the shadow of the American Woman.
Poilievre and the whole conservative movement is behind the curve on this political development against one who is a conviction politician, a most unusual anomaly within a party whose only conviction has hitherto been to govern for its own sake.
They are losing my family of cultural, yet politically moderate, conservatives. They are losing me, who has never before voted left of center. For Carney’s Liberals are doing the very thing I proposed back in 2017, having been fully aware of the American zeitgeist at that time.
Roughly seventy-five percent of our exports go to the United States, constituting almost thirty percent of our economy. If there be economic disruption, whether because of social/civic or economic causes, those exports, just like happened in the aftermath of the 2008/9 Great Recession (re: a 25% decline), will be inordinately affected. Should not the diversification of our trade become first and overriding priority, especially with an American administration devoted to a Realpolitik bullying of other nations into a regime of permanent economic advantage for the United States? (Even apart from the present politicos, the existential economic sclerosis in the United States will incline them to increasing self-serving and myopic trade policy).
Pipelines, both east and west, must be approved; not because there are not environmental dangers and detriments to carbon-based energy; but because the welfare of the nation is dependent upon more than just one aspect of life. Oil and natural gas should be used as a trade lever (through long-term guaranteed supply) to open up foreign markets which are effectively closed through tariff and non-tariff barriers. An activist inculcation of extensive balanced trade deals with other nations of similar economic status should be pursued.
The goal should be the reduction of our exports to the United States to considerably less than 50% of total exports, not only for economic reasons of safety, but to reduce any threat to political autonomy by a more bullying American foreign and trade posture. There will be disruption. There will likely be economic loss, at least in the interim. However, such is the need for inoculation to make us less vulnerable to the most likely outbreak of American disease.
While we are thinking of the unthinkable; because America is showing itself to be a less reliable defense partner, and because conflict in the United States may induce military incursions into our country, we may need to acquire our own weapons of mass deterrence.
