After spending months speaking up Canada’s relationship with the US, Prime Minister Justin Trudeau will convene an financial summit on Friday with a brand new focus: selling his nation’s commerce with the remainder of the world.
The aim of the Canada-US Financial Summit shall be to “make it easier to build and trade within our borders, and diversify export markets”, Trudeau mentioned on Wednesday.
The transfer comes days after Trudeau negotiated a 30-day reprieve from Donald Trump’s plan to impose tariffs of 25 per cent on Canadian imports into the US, besides power, which might be taxed at 10 per cent.
After a long time of free commerce between the US and Canada, the American president’s tariff menace to a relationship price C$1.3tn ($91bn) has prompted a reckoning amongst policymakers about easy methods to curb the nation’s dependence on its southern neighbour — and easy methods to recalibrate its economic system.
“Canada’s strategy for the past 30 years has relied on trade agreements . . . that Trump has disrupted, and no longer can be relied on as a business case for Canada,” mentioned John Manley, a former finance minister.
Trudeau has summoned chief executives, coverage consultants and labour unions to Toronto alongside his Council on Canada-US Relations, which incorporates the heads of main auto elements firms and a number of other former provincial premiers.
His effort to rally the enterprise group displays an anxiousness that Canadian firms could not take pleasure in unfettered entry to the world’s greatest economic system.
Trump’s threatened commerce warfare comes at a time of acute political turmoil for Canada. Trudeau final month suspended parliament to purchase time for his governing Liberal get together to decide on a brand new chief earlier than going through a basic election this yr.
The prime minister is leaving workplace with a dismal recognition ranking, however his dealing with of Trump has gained reward even from opponents. Trump’s menace to Canada — and his frequent taunts — have sparked a burst of patriotism.
Greater than 90 per cent of Canadians now favour higher financial independence from the US, up from 59 per cent earlier than Trump’s tariff menace, in keeping with a ballot from the Angus Reid Institute.
“Trump should be the wake-up call. We have a really big economic challenge on our hands . . . We have been so complacent in relying on the United States,” mentioned Martha Corridor Findlay, director of the College of Public Coverage on the College of Calgary.
Over 50 years Canada has fallen from being the sixth most-productive economic system within the OECD to 18th in 2022. Within the G7, it now ranks sixth. Labour productiveness in 2024 was 1.2 per cent beneath pre-pandemic ranges, having fallen in 14 of the previous 16 quarters.
Worldwide commerce has grown twice as quick as inside commerce since 2010, in keeping with Scotiabank Economics. Canada sends 77 per cent of its exported items to the US, and no different marker is larger than 5 per cent, Scotia mentioned.
Among the many loudest complaints from business and a few consultants is that Canada’s leaders, together with Trudeau, haven’t constructed power infrastructure to permit Canada to promote its oil and gasoline abroad.
The Trudeau authorities did fund the Trans Mountain Growth pipeline to Canada’s west coast — permitting extra exports to Asia — that opened in Might final yr after greater than a decade of improvement and at a price of C$34bn, 4 occasions over price range.
However the Trump turmoil has reignited debate over beforehand cancelled initiatives equivalent to Vitality East, which might have despatched oil from Alberta to as distant as Canada’s japanese Atlantic coast, and Northern Gateway, one other mission to export heavy oil to the Pacific coast.
“If we cut the red tape we could have a pipeline built in two years,” mentioned Adam Waterous, chief govt of Strathcona Sources, Canada’s fifth-largest oil producer.
He added the US purchased “liquid gold at liquid silver prices” as a result of “Canada has no other options” however to ship most of its oil to refiners south of the border.
Andrew Leach, an power and environmental economist on the College of Alberta, mentioned big funding was wanted to construct pipelines however the initiatives additionally wanted backing from Canada’s provinces, First Nations teams and environmentalists in addition to the federal authorities.
The nation’s oil business would “happily move oil and gas to the west coast instead of the US midwest, it makes sense to do this”, he mentioned. “But this recent blaming of Trudeau for the lack of pipeline options seems to forget the Conservatives were in power for a decade before him.”
Since Trump’s tariffs threats in latest days, politicians have been faster to swing behind boosting Canada’s inside commerce.
Canada’s provinces defend their native industries equivalent to farming and alcohol. Differing regulation means staff can’t all the time transfer their credentials to different areas. Truck drivers additionally face complications, together with totally different guidelines for the weights of automobiles in numerous jurisdictions at totally different occasions of the yr.
Trudeau’s minister of inside commerce, Anita Anand, has been main efforts to interrupt these boundaries — a transfer she mentioned “will potentially add up to C$200bn to the Canadian economy”.
However a long time of effort have gone into easing this inside commerce friction, and the obstacles stay.
Many officers and consultants are sceptical about how a lot will be achieved to spice up Canada’s financial independence from the US, given the inescapable actuality of geography and the international locations’ relative measurement.
These pushing for higher financial self-reliance argue Canada has little selection — and level out that America’s financial flip inwards just isn’t distinctive to Trump. Even Barack Obama set off alarm bells in Canada together with his speak of “Buy American” insurance policies.
Leach mentioned there have been classes for Canada from the UK’s expertise after Brexit.
“Canada is next to the world’s largest free market economy,” he mentioned. “And while the US is doing this to us, if you decide to separate from them completely, it can end badly.”
