Canada’s Trade Position: Between a Rock and a Superpower

Canada’s trade profile is unique:

• We export heavily to one partner: the U.S. accounts for about 75% of our exports.

• We are resource-rich, meaning we export oil, timber, minerals, and food—but often import higher-value goods.

• We sometimes run trade surpluses (like with energy) and sometimes deficits (like with consumer goods or electronics).

We’re not a Germany or Japan with a consistent surplus. But we’re also not like the U.S. running a massive trade deficit. We’re somewhere in the middle.

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The Investment Side: A Tale of Two Dependencies

Here’s where it gets tricky:

• Canada relies on foreign investment—particularly from the U.S.—to fund businesses, infrastructure, and real estate.

• At the same time, Canadian pension funds and financial institutions are increasingly investing abroad, chasing higher returns and diversification.

So, we’ve become a country that:

• Trades heavily with one country (the U.S.)

• Attracts capital from that same country

• And sends our own capital overseas

That’s a fragile setup if any one of those three legs falters.

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The Domestic Puzzle: Trade Barriers Between Provinces

There’s another issue few people talk about—Canada’s internal trade barriers. While we’re negotiating trade deals with Asia and Europe, we still struggle to trade freely within our own borders.

Each province often has its own:

• Regulations and standards

• Licensing rules

• Transport restrictions

• Procurement preferences

In economic terms, Canada acts more like a patchwork of small countries than a unified domestic market.

That makes it harder for:

• Businesses in Alberta to sell services in Quebec.

• Ontario-based manufacturers to access B.C.’s infrastructure contracts.

• Canadian consumers to benefit from price competition across provinces.

Internal trade barriers cost Canada billions in lost productivity and opportunity every year.

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What’s the Risk?

Canada’s exposure lies not in extremes but in quiet dependencies and inefficiencies:

• Over-concentration: Relying on the U.S. for trade and capital is risky.

• Underinvestment at home: We’re sending capital abroad while internal trade stays blocked.

• Commodity cycles: When oil or lumber prices fall, our trade strength weakens.

• Fragmentation: Without a strong internal market, Canada lacks the scale and cohesion needed to compete globally.

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What Could Canada Do Differently?

To strengthen our position, Canada could:

• Diversify trade: Focus more on Asia, Latin America, and intra-Commonwealth trade.

• Encourage domestic investment: Incentivize Canadian institutions to build Canadian infrastructure and innovation.

• Eliminate internal trade barriers: Act on the principle that Canadians should be able to do business anywhere in Canada.

• Focus on value-added exports: Move beyond raw commodities and into technology, renewable energy, advanced manufacturing.

• Boost productivity: Through tax reform, innovation funding, and regulatory streamlining.

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Final Thoughts

Canada’s vulnerability lies in its dependencies, and its opportunity lies in its untapped strengths.

We’re a rich country trading like a resource economy and governing like a collection of provinces. Fixing that isn’t just about trade—it’s about thinking more like a modern, unified, investment-savvy nation.