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Every day, we hear about the need to reduce our reliance on trading with the United States. In 2025, total Canadian exports of goods and services were slightly more than $1 trillion and 67 per cent of that went to the U.S. Our imports from America were only a little less.

The argument for diversifying our trade is partly economic and partly based on enhancing our sovereignty and national security, especially in light of U.S. President Donald Trump’s punishing tariffs and his frequent comments about using economic force to make Canada the 51st state.Given the long-standing and strong economic case for trading with the world’s largest and richest market right next door, there will almost certainly be a price to pay for achieving greater trade diversification.

We will need to incur costs to open up new markets and develop new products to sell there – markets which may be more reliable but less easily profitable than the United States.

There will be costs associated with building resiliencies into our supply chains, including stockpiling critical inputs. For those things we decide to produce in Canada rather than import from the current lower-cost foreign suppliers, we will likely have shorter production runs and higher unit costs.

So, while we may end up being “better off” by enhancing our resilience and sovereignty through diversifying our trade, we probably won’t be richer in pure financial terms.

How much will Canadians be prepared to pay to get those benefits? We need to know these costs exist and have some idea of the size of the trade-offs involved. The time for discussing the issue is now.

But let’s start at the beginning and then circle back to these costs. What are the underlying objectives we are trying to achieve through greater trade diversification?

A long-standing goal of Canadian public policy has been to increase our material living standards, usually expressed as some measure of average real income. For decades, having mostly free trade with the United States was an important part of achieving that.

In recent years, however, there has been considerable concern about our sluggish real income growth and about widening income gaps between Canada and other advanced countries.

Join the author for an IRPP online discussion Tuesday: Overcoming challenges to diversifying Canada’s trade

Join the author for an IRPP online discussion Tuesday: Overcoming challenges to diversifying Canada’s trade

Buy Canadian won’t cost us much. That’s the problem

Buy Canadian won’t cost us much. That’s the problem

Donald Wright, a former senior government........

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