How Canada Wins At Trade
For the third week of the Gloves Off podcast, host Stephen Marche is asking: “How Canada Wins at Trade.” If you haven’t heard the episode yet, check it out here.
How Canada Wins at Trade
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Throughout their eight-week podcast run, The Canadian Shield Institute is supporting the Gloves Off team with policy and economic research. And we think that before you try to come up with a strategy for how Canada can win, you need to answer a much more basic question: “Where are we at with trade right now?”One answer to that question is documenting the various deals that Canada has already inked in the past year. That was our Variable Geometry map that we published last week. (Don’t know what “variable geometry” means? No sweat, we’ve got a blog for that.) But the deals are also forward-looking, in a way. But what’s already happening out there in the global economy? We are just now starting to get a preliminary view of the data, and here are four charts of the picture that’s starting to come into focus. It’s still early days and the data lags and will be updated, but Canada isn’t doing as badly as we thought. When the trade war hit last year, there were grand predictions of a sharp economic downturn for Canada. That didn’t happen. Instead, Canada made up for the drop in exports to the U.S. with an increase in exports to every other jurisdiction around the world. |
The increase in the price of gold certainly played a part in boosting export values, but the broader pattern shows that Canada is agile enough to shift trading patterns in response to external shocks.
Canadian merchandise exports to the United States fell by more than $30 billion in 2025—a decline of just over 5 percent. Yet this drop was almost entirely offset by a corresponding $29 billion increase in exports to non-U.S. markets. Europe alone accounted for over $22 billion in new demand (about 50% of that increase was gold), while Asia, Latin America, and Africa all posted meaningful gains. What emerges is not a story of contraction, but of substitution—Canada didn’t export less, it exported elsewhere.
Add in services exports, which actually grew in 2025 (to both the U.S. and Europe), and Canada’s total exports increased by about $6.9 billion despite all the volatility.
We talked about this, and what a middle powers trade strategy looks like, in Cross Check this week. It was a great chat with Stephen Marche and Jon Shell. Listen to that lively conversation here:
Cross Check: How Canada Wins at Trade
And for an even deeper dive on the themes discussed in Cross Check, we have additional analysis in our post on Canada’s Automotive Value Problem in Four Charts.
In the News
AVAILABLE FOR PRE-ORDER – Former Canadian ambassador to the United Nations Bob Rae’s edited collection of essays, Reclaiming Canadian Sovereignty in a Ruptured World, is now available for pre-order from (Canadian publisher) Lorimer Press. There are two chapters from our Institute in it. The book comes out September 9th. Order here.
OFFICE OF THE PRIVACY COMMISSIONER OF CANADA – It became public this week that our shop is a recipient of a research grant from the Privacy Commissioner’s office. We’ll publish in 2027. Read about all the projects here.
Song of the Week
With Canada and the United States currently squabbling over who gets what from an actual bridge, it felt like the right week for Bahamas’ “The Bridge.”
The Canadian singer’s sweet, slightly woozy song is a gentle reminder that bridges are generally meant to connect people… not become extremely expensive props in a cross-border power struggle. Consider this a small musical contribution to bilateral relations.
Ever since Prime Minister Mark Carney visited the European Parliament in September, we’ve been thinking about what a deeper alliance across the Atlantic Ocean could mean. As we hit send on this email, Carney is meeting with António Costa, President of the European Council, and Ursula von der Leyen, President of the European Commission, in Montreal. At the end of it all, we’re expecting an announcement of … something. There have been a lot of anonymous tips in news reporting, but at the Canadian Shield Institute, we prefer to read the formal communiqué rather than trying to interpret whispers. In the run-up to the summit, we’ve been doing a bit of research, and we published a few articles to set the stage. EU Media Marketplace The Europeans are trying to break the AdTech duopoly. Canadian companies have tried to work together to create an alternative to Google and Meta’s dominance. So far, Canada’s efforts have fallen flat. Will this new EU enterprise fare any better? Read our analysis here. We find this whole situation very interesting for two reasons: First, Canada and Europe have a lot of the same problems right now. We’re all trying to figure out how to reduce vulnerability from the United States, and that vulnerability extends to digital reliance on private-sector technology platforms. It seems like we could benefit by joining forces, but it’s going to take some work figuring out exactly what that looks like in practice. Second, AdTech is just really interesting! Programmatic targeted advertising is the economic engine of the internet, and in turn this kind of advertising is hugely influential on culture and society. AdTech dictates what kinds of businesses thrive and what kinds of content gets posted online. Once you start researching it, AdTech quickly starts to look like one of the most important dimensions of digital sovereignty. If the online economy is entirely dominated by systems controlled by a handful of big American technology companies, realistically both Canada and the EU will always be on the back foot on digital governance. Digital Services Trade Speaking of being on the back foot, did you know that U.S. digital services exports to Canada are worth more than all the autos, steel, aluminum, lumber, potash and electricity put together? Why aren’t we talking about digital trade policy more in the negotiations with the United States? Read our analysis here. And the European Union is in a similar position. The EU has done a lot more to assert digital governance, but their trade deficit on digital services just keeps going up. This is a kind of reliance that creates a meaningful vulnerability if the United States keeps playing hardball. Read our analysis about EU digital trade here. Digital services might be a promising area for Canada and the European Union to work together. When the final communiqué is delivered from the Canada-EU summit, we will be combing through it for specific mentions of digital trade collaboration. Digital Sovereignty Policy Despite the EU’s digital dependence, we see a lot to admire in how the Europeans have been trying to assert their digital sovereignty. To be blunt: They’re trying things! Canada has often been slow to pass meaningful digital regulation, and quick to walk back policies that offend the Americans. The EU has enacted some really interesting regulations. Could Canada use “digital trade alignment” as cover to follow the EU’s lead? Read our analysis here. The Bottom Line Overall, when it comes to digital governance, we have a lot of hard work ahead of us. Digital policy is complicated and opaque, and it’s not enough to just pass a good law. Ongoing enforcement is a real challenge too. But this is one of the most pressing policy issues of our time, and with the accelerating deployment of AI systems, this issue is only going to become more urgent. It’s not as easy as striking a deal to sell soybeans, but digital governance is an area where Canada and the EU are natural partners, and it’s something we should be working on.
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