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Prime Minister Mark Carney will host an investment summit in Toronto next week, then jet off to Strasbourg, France, to announce deeper ties with the European Union.
There’s nothing wrong with that. Canada should diversify its trade.
The problem is that Carney increasingly talks as though Europe can replace the United States .
It can’t.
Just look at the hard, cold facts. In 2025, we exported a little over $400 billion USD to the United States but just shy of $31 billion USD to the entire EU. After a decade of having a free trade agreement with the EU, our exports have only increased by $8.4 billion after accounting for inflation.
That’s a significant increase in exports to the EU, but it equals about a week’s worth of trade with the United States. Figures published by the Library of Parliament show that, as with most of Canada’s major trading partners other than the U.S., we buy far more from the EU than we sell to them: $66 billion USD last year.
A week vs. a year
Last year, Carney pledged to double our exports to countries other than the United States over the next 10 years. It’s a laudable goal, but even if we took all of our exports to the EU, Britain, China, Japan and Mexico and doubled them tomorrow, it would still come in at just a bit over $200 billion, or about half of what we sell to the U.S. in a down year.
Canadians are mad at the aggressive trade actions that Donald Trump has taken against Canada. First tariffs, now a booze ban and threats to stop the sale of Bombardier jets south of the border.
Carney is leaning into those feelings, ramping up the trade-war rhetoric for his own political gain. Just as he has oversold Canadians on the demands of the United States in the most recent round of talks, he is overselling what he has done and what we can do to diversify trade.
Trump is a difficult president to deal with. Future American presidents will also be difficult. Congress may be difficult.
But Lake Ontario doesn’t move.
Geography always wins
We trade as heavily with the U.S. as we do because it’s the world’s largest economy sitting beside us. The relationship is reinforced by integrated supply chains, pipelines, electricity grids, rail links, highways and decades of investment.
We can ship parts or a fully assembled car from Ontario to Michigan in a matter of hours. Potash from Saskatchewan easily rides the rails through the American Midwest to service farms in Wyoming, Nebraska and Oklahoma.
Packaging any of those things and shipping them to Europe or China is more difficult, takes more time and costs more money.
If Carney’s end goal is to replace the U.S., and given his rhetoric and actions that appears to be the case, there is one fundamental problem: the EU and China aren’t buying much of what we are selling to the U.S.
You don’t see many Chevy Silverado pickup trucks or Toyota RAV4 SUVs in Brussels or Paris, and we aren’t about to start seeing them in Beijing.
Our auto sales to the U.S. are worth more than everything we sell to the EU.
Diversify, don’t decouple
Diversification does not have to mean decoupling from the United States. We should be adding more trade with more partners, not seeking to replace trade that moves north-south.
That is a difficult task, though.
When Stephen Harper was prime minister, he signed Canada on to new trade deals with South Korea, Colombia, Peru, Iceland, Liechtenstein, Norway and Switzerland. He negotiated the free trade deal with Europe and the Trans-Pacific Partnership.
Most of our trade still travelled south to the U.S.
Politicians can sign trade agreements. They can launch trade missions and announce new partnerships.
What they can’t do is move Canada.
And that’s why America will remain our biggest customer for a very long time.