Canada's Diversification Strategy Away from the U.S. Is Unrealistic
Source: Chuck DeVore. "Canada Has No Real Alternative To Taking Trump's Trade Deal." September 23, 2026. thefederalist.com
The Gist
The author argues that Canada is stuck economically and geographically tied to the United States, no matter how much Prime Minister Carney talks about partnering with the EU or China instead. He says joining the EU is legally almost impossible, China carries its own risks, and Canada's pipelines, factories, and investment are all wired toward the U.S. — so pretending otherwise is just wishful thinking that hurts Canada more than it helps.
Conclusion
Canada has no real alternative to accepting a trade deal with the United States, and its attempts to diversify toward the EU and China are a form of political self-sabotage rather than a viable strategy.
Premises
- Canada cannot join the EU (membership requires being a 'European state') and any lesser association status would require unanimous approval from all 27 member states, a process that has already left even the existing CETA agreement unratified by ten countries after years.
- Roughly 75% of Canadian goods exports have historically gone to the U.S., and America still dominates even after tariffs, with American investors holding about 46% of foreign direct investment stock in Canada and supplying over half of 2025 investment inflows.
- Canada's physical infrastructure, especially its 840,000 kilometers of pipelines, points south to the U.S.; alternative export routes like Energy East are dead, and reversing this dependency would take 15-20 years and capital not available from Europe.
- Geographic, linguistic, and institutional ties (contiguous borders, shared time zones, NORAD, English language) have hardwired the U.S.-Canada relationship in ways Europe and China cannot replicate.
- Manufacturing, though only 10% of Canadian GDP, is the high-wage integrated sector most dependent on U.S. supply chains (e.g., Ontario auto parts), and cannot be absorbed by European alternatives.
- Turning to China carries its own risks, including likely American retaliation and security concerns that Ottawa itself has previously recognized.
- Canada's military remains too weak (readiness issues, aging submarines, thin Arctic patrol capacity) to back up an independent foreign policy stance, undermining its leverage in seeking alternatives to U.S. dependence.
- The dependence between the U.S. and Canada is asymmetric: Canada treats U.S. market access as existential, while the U.S. can source alternatives (Venezuelan oil, Mexican auto production) and treat Canadian supply as merely convenient.
Assumptions
- Current economic and infrastructure patterns will persist over the relevant time horizon rather than change significantly.
- Political will and capital availability in the EU and China are fixed constraints that cannot be overcome through sustained diplomatic effort.
- Trump's negotiating rhetoric, however inflammatory, does not fundamentally damage the long-term structural relationship between the U.S. and Canada.
- A future U.S. administration would not be meaningfully more accommodating to Canadian diversification efforts.
- Economic and infrastructural dependence necessarily translates into a lack of viable political alternatives.
- Canada's 'sabotage' framing assumes that pursuing diversification is net harmful rather than a legitimate long-term hedging strategy, even if slow.