Prime Minister Mark Carney has the right idea in seeking to diversify Canada's export markets as a counter to U.S. trade dominance, but his goal of doubling it in 10 years is far-fetched.
Basically, it's an "aspirational" target, much like former prime minister Justin Trudeau's industrial greenhouse gas reduction targets — and we all know what a massive and expensive failure that was.
Challenges of Trade Diversification
According to a new report by the Fraser Institute, "despite the federal government's pledge to double exports to markets other than the United States by 2035 … doing so will be very difficult given the size, strength and close proximity of the U.S. market."
Efforts to reduce Canada's reliance on the U.S. market have been going on for decades, long before U.S. President Donald Trump's campaign to use tariffs to get better trade deals from foreign countries.
As the Fraser Institute notes, Canada's reliance on the U.S. market for exports decreased slightly in relative importance from 1999 to 2011, but remained essentially unchanged from 2011 to 2024.
Recent Export Trends
According to an RBC report released this week, Canadian exports to the U.S. dropped from 76% in the fourth quarter of 2024 to 68% in the same period in 2025.
But RBC said it wasn't due to Canada finding new international buyers for tariffed products, but to a surge in gold prices, which rose more than 20%, making it Canada's second-largest export last year after crude oil and cushioning declines in other goods.
Infrastructure Investments Needed
It's not that Carney's strategy doesn't make sense.
As the Fraser Institute notes, trade diversification will require substantial investments in Canadian rail and port infrastructure to reduce transportation costs to non-U.S. markets, which is part of Carney's plan.
But when the PM boasts that Canada has free trade deals with countries covering 1.5 billion people and that "over the past 12 months Canada has secured more than 20 new economic and defence partnerships and $97 billion in foreign investment commitment," it doesn't change the reality that the U.S. will remain Canada's dominant trading partner for decades.
That's why the key issue is Carney's ability to negotiate a good deal with Trump under the Canada-U.S.-Mexico Agreement on trade, now up for review.
