Trump tariff threats reveal Canada’s trade dependency on U.S.: experts

Canada's reliance on the United States as a market for its exports has been exposed by president-elect Donald Trump's tariff threats, experts warn.

Canada failed to cultivate new trade corridors that could have helped to mitigate the potential impact of Donald Trump’s tariff threats ahead of his return to the White House, experts tell Global News.

The U.S. president-elect lobbed the first salvo of his incoming administration’s efforts to reshape North American trade this week, promising to levy 25 per cent tariffs on all goods entering the country from Canada and Mexico unless the countries meets his demands on the border.

That’s sent politicians and industry players scrambling at the prospect of disruptions in getting Canadian goods to the U.S. market, Canada’s largest trading partner by a wide margin.

Some 77 per cent of the value of all Canadian exports heads to the U.S., according to Statistics Canada data from 2023. China is the closest export market for Canada at only four per cent, followed by Japan (2.1 per cent) and the United Kingdom (two per cent.)

Dennis Darby, the CEO of Canadian Manufacturers & Exporters, says that Canada’s close ties to the juggernaut U.S. economy have only intensified since renegotiating the Canada-U.S.-Mexico Agreement (CUSMA) under the last Trump presidency.

Trade volumes between the three neighbours have grown roughly 30 per cent since CUSMA was signed, according to Darby. That’s appropriate, he says, given the history between the trading allies and the significant supply chains that have built up across North America.

“They are a huge economy and a huge pull for our products,” Darby says of the U.S. specifically. “So changing that won’t be something you can do in a few months.”

Darby and other experts who spoke to Global News say that while there are opportunities to diversify Canadian trade in the face of a possible disruption at the southern border, Canada did not sufficiently build out new trade corridors since the last Trump presidency to get out ahead of the renewed threats.