Canada's Real Trade Problem Isn't Trade. It's Dependence.

Canada's economy is not vulnerable because trade is bad. Canada is vulnerable because too much of its trade depends on one customer.

That customer is the United States, and the numbers are enormous. Canada and the U.S. exchanged nearly $3.5 billion in goods and services every day in 2025. More than 75% of Canada's exports go to the U.S. Trade and investment between the two countries support millions of jobs on both sides of the border. This is not a small relationship Canada can simply replace if things go badly. It is the backbone of entire industries.

Canada still has CUSMA, the Canada-United States-Mexico Agreement. The deal came into force on July 1, 2020, replacing NAFTA. It still exists, and it still protects a large amount of Canada-U.S. trade. But CUSMA was built with a six-year review clause. The first major review was scheduled for July 1, 2026. If all three countries agree to extend it, the agreement gets renewed for another 16 years. If they do not, the deal does not vanish overnight, but it moves into annual reviews and uncertainty until its scheduled end in 2036.

That is the real problem: not that Canada has no trade deal, but that Canada may no longer have enough certainty.

Businesses do not make billion-dollar decisions one year at a time. A company deciding whether to build a plant in Ontario, expand a mill in British Columbia, invest in steel production, or hire more workers in Alberta needs to know what the trade rules will look like years from now. If the rules are constantly being reopened, threatened, or renegotiated, investment slows. And when investment slows, jobs eventually follow.

This is why the Conservative argument has landed with many people: Canada needs more leverage at home before it can negotiate strength abroad. Pierre Poilievre has argued for knocking down internal trade barriers, speeding up project approvals, building a national energy corridor, retaliating against unjustified U.S. tariffs, and using tariff revenue to support affected workers and businesses. He put it bluntly in a recent interview: "We have freer trade now with the Americans than ourselves." He added that if America is going to be unreliable, Canada has to "sell more to ourselves and the world."

That is not just a political slogan. It is a practical economic argument. Canada cannot credibly say it will diversify trade if it cannot move goods easily across its own provinces. It cannot sell more energy to Europe or Asia if it cannot get more energy to tidewater. It cannot replace lost investment if major projects take years to approve. And it cannot protect workers in autos, steel, forestry, agriculture, energy, and manufacturing if companies decide the safer bet is to move production south of the border.

The internal trade piece matters more than it sounds. Economists have estimated that removing interprovincial trade barriers could raise Canada's GDP meaningfully over time, with some estimates near 4%. That does not solve U.S. tariffs tomorrow morning, but it would make Canada more productive, more flexible, and less dependent on one export route. In plain terms: if Canada wants to be treated like a serious economic country, it has to act like one inside its own borders.

The current Liberal government has also moved in that direction. Mark Carney's government passed the One Canadian Economy Act in June 2025, aimed at reducing federal internal trade barriers and speeding up major national projects. That is a sign the political centre has shifted. Ideas that sounded ambitious a few years ago now sound like basic survival.

Carney himself has acknowledged the larger change. At an APEC summit, he said the old world of steadily expanding rules-based trade was "gone," and said Canada should aim to double non-U.S. exports over the next decade. Earlier in the tariff fight, he said Canada would respond to U.S. tariffs and look for "free and equitable" trade relationships elsewhere. Even the government now seems to understand that dependence on the U.S. market has become a strategic weakness.

But understanding the problem is not the same as fixing it.

For decades, Canada benefited from freer North American trade. The Canada-U.S. Free Trade Agreement, then NAFTA, then CUSMA helped build integrated supply chains. Government of Canada data says Canada-U.S. merchandise trade tripled between 1993 and 2021. In many sectors, Canadian and American companies do not just sell to each other; they build things together. A vehicle assembled in North America can include parts that cross the border multiple times before it reaches a dealership.

That integration created jobs and prosperity. But it also created exposure. When Washington threatens tariffs on steel, aluminum, automobiles, lumber, or energy, Canada does not experience it as an abstract policy debate. It shows up as postponed investments, temporary plant shutdowns, higher costs, and workers wondering whether their next shift will still exist.

Energy is one of the clearest examples. Canada is the largest foreign supplier of energy to the United States. Two-way Canada-U.S. energy trade reached $216.8 billion in 2024. Canada also sends about 94% of its crude oil exports to the U.S. by pipeline. That relationship is valuable, but it also means Canada often sells into one main market at one main price. A national energy corridor or stronger export infrastructure would not be about turning away from the U.S.; it would be about giving Canada options.

The same applies to manufacturing. If U.S. tariffs make Canadian production more expensive, companies may shift new investment to American states. That does not always happen dramatically. Sometimes the loss is quieter: a plant that does not expand, a new model assigned elsewhere, a supplier that hires 50 fewer people, a mill that delays modernization. The country feels those losses slowly, then all at once.

What should happen next is fairly obvious. Canada should fight hard to preserve CUSMA and stable access to the American market. The U.S. will always be Canada's most important trading partner. Geography alone guarantees that. But Canada should stop behaving as if proximity is a complete economic strategy.

The coming months and years will show whether Canada is serious. Watch the CUSMA review process and whether the agreement returns to long-term certainty or stays in annual political limbo. Watch whether the U.S. keeps sector-specific tariffs on steel, aluminum, autos, lumber, and other sensitive goods. Watch whether companies keep investing in Canada or quietly shift future growth to the United States.

Also watch whether Ottawa and the provinces actually remove internal barriers, not just announce that they should. That means labour mobility, trucking rules, alcohol sales, professional licensing, procurement, and product standards. These issues sound small compared with a trade war, but together they decide whether Canada is one economy or thirteen smaller ones arguing with each other.

The lesson is simple. Trade with the United States made Canada wealthier. Depending too heavily on the United States made Canada weaker. The answer is not anti-Americanism. It is self-respect: build at home, sell to more markets, move goods freely inside Canada, approve serious projects faster, and negotiate with Washington from a position of strength.

Canada still has CUSMA. What it needs now is leverage.