Canada is expanding trade ties with Asia due to stalled negotiations with the United States and tariffs imposed by President Trump. A report from Business Insider details the shift.
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Within a year, the US’s second-largest trading partner has rapidly ramped up efforts to explore new deals with regional powers in Asia, or to revive talks that had been previously put on ice. As of November, the US has imposed a 35% tariff on all goods from Canada that are not covered by the USMCA. Canadian exports of steel and aluminum to the US also face a 50% duty. The northern neighbor has since matched some of Trump’s levies, and Trump has repeatedly threatened to end trade negotiations with Canada.
Expert Analysis on the Pivot
International trade experts in both Canada and the US told Business Insider that the pivot is spurred by a lack of progress in negotiations with the Trump administration, which has made tariffs a cornerstone of its policy, and doubt about whether a good deal with the current administration is still possible.
Phil Luck, the director of the Economics Program at the Center for Strategic and International Studies, told Business Insider that he observed similar efforts to diversify trade during the first Trump administration, and that the current trend is “an indication” of how trade discussions have progressed with the US this year.
“Canada took our extreme turn in our trade relationship with them pretty seriously,” said Luck, “because this is a very big change in how the US has sort of traditionally treated Canada, and it has really drawn the ire of the Canadian people as a result.”
“So even if there was a somewhat palatable sort of middle ground, our partners also have democracies, and they need to find a solution that’s palatable to their population,” Luck added.
The Diversification Push
Recent deals include agreements with Indonesia, the United Arab Emirates, and ASEAN talks. In September, Ottawa signed a comprehensive free-trade agreement with Indonesia, the first with the Asian Pacific country. Two months later, Canada secured a bilateral investment treaty with the United Arab Emirates that came with an expanded air-services pact. Canada is also fast-tracking a previously stalled trade agreement with India and pushing for a free trade agreement with the entirety of ASEAN by the end of 2026.
A campaign page promoting foreign investment had appeared by August on the Canadian government website, featuring a slogan that reads, “Diversification is a national imperative.”