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John Ivison: Canada's pivot to Europe for trade gains traction as Trump loses momentum

Europe Union in talks to join the Trans-Pacific Partnership, which includes Canada

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One of the most unheralded stories of last year was the increase in Canadian exports to the United Kingdom, to the point Britain has become this country’s second-largest export market, overtaking China.

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In the first 11 months of 2025, exports to the U.K. hit $42.5 billion, compared to $31 billion to China. That is a nearly 60 per cent increase, in large measure because of a surge in gold shipments (Canada is a producer; Britain a global hub) but there were solid rises in agrifood, clean tech and aircraft.

John Ivison: Canada's pivot to Europe for trade gains traction as Trump loses momentum Back to video

This is clearly important at a time when reports are emerging from Washington that President Donald Trump is privately musing on withdrawing from the free trade agreement with Canada and Mexico that is up for renewal this year.

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The big picture is that the uncertainty Trump has created on the trade front has seen exports south of the border fall five per cent in the 11 months to the end of November. But growth in the U.K., the European Union and in Asia Pacific have more than made up the shortfall. The Americans only accounted for 68 per cent of exports in November — still far too high but considerably lower than in previous years.

On Monday, Politico reported that the European Union and the 12-member Trans-Pacific Partnership (which includes Canada and Britain, as well as Japan, Mexico, Vietnam, Malaysia, Australia, Peru, Chile, Brunei, Singapore and New Zealand) have launched exploratory talks about creating a new trading bloc.

This is exactly what Prime Minister Mark Carney was referring to in his Davos speech about “middle powers acting together because if you are not at the table, you are on the menu.” In fact, he specifically mentioned that Canada was championing efforts to build a bridge between the TPP and the EU.

According to Politico, the idea is being well received in Tokyo, Berlin and London. Some skeptics will point out that Canada’s trade deal with the EU has still not been ratified by 10 of its members nearly a decade after coming into force. But Canada saw a 57 per cent increase in exports to the EU in 2024, compared to 2015, so there is evidence that these deals do yield fruit.

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There is an unmistakable feeling that the momentum has shifted away from Trump in recent weeks. He appears to be a paper tiger, unprepared or unable to follow through on his frequent threats.

Trump might warn he is going to walk away from the Canada-U.S.-Mexico trade deal but Canada’s new Chief Trade Negotiator Janice Charette is an old political hand, alive to the use of bluster as a way to increase leverage.

For one thing, business groups and American lawmakers would rebel. The House of Representatives voted last week to rebuke the president’s punitive measures on Canada, with six Republicans joining the Democrats. The vote did not secure the two-thirds majority needed to overcome Trump’s veto — but a CUSMA pull-out vote could.

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For another thing, Trump is already under massive pressure on the cost of living ahead of the midterm elections.

The Congressional Budget Office said last week that American consumers and businesses are bearing 95 per cent of the cost of Trump’s tariffs. The effective tariff rate is now 13 percentage points higher than in 2024.

“Those policies — together with the actions of major trading partners — will in the CBO’s assessment temporarily raise the rate of inflation, reduce real investment, lower the level of gross domestic product and reduce employment in relation to what would have occurred without the changes in trade policy,” it concluded.

The Yale Budget Lab has estimated the median cost of tariffs at US$1,400 for each American family.

Trump has talked about ratcheting up tariffs to 100 per cent if Canada strikes a trade deal with China; raising duties on Canadian aircraft if Canada does not approve Gulfstream jets; and refusing to allow the opening of the Gordie Howe Bridge.

A year ago, those threats would have sent a shiver running through the House of Commons looking for a spine to run up.

Now they are derided. Nobody thinks Trump is going to walk away from CUSMA.

There will, no doubt, be hard discussions.

U.S. Trade Representative Jamieson Greer is looking for higher regional content to boost domestic auto production, improved access for U.S. agricultural products, particularly dairy, more protection for America’s technology sector and an agreement to secure critical minerals.

But that at least looks like a negotiation, not a heist.

Last week, far-right U.S. network Breitbart News interviewed Conservative MP Jamil Jivani, who decided to go to Washington to talk to his old friend, Vice President JD Vance.

Jivani told Breitbart that Canadian officials are harming the country by having “an anti-American hissy fit.” He said “the Canadian economy is genuinely struggling,” citing the 52,000 private-sector jobs lost in January. He said he wanted to see dialogue between the two countries “where it is not an opportunity cost to grow jobs in the auto industry in Canada, but we can actually be supporting the growth of manufacturing on both sides of the border at the same time.”

There is clearly only one impediment to that view being more broadly adopted and it is not Canadian officials having hissy fits.

Canada has seen better days, no thanks to Trump’s vandalism. But it is standing firm.

Jivani didn’t mention that Canada had 149,000 more people in full-time work last month compared to 12 months earlier.

Trump has tried, in Carney’s words, to use economic integration as a weapon of coercion.

But as Canada reduces its vulnerability to his retaliation, the tables are turning on the president.

jivison@criffel.ca Twitter.com/IvisonJ

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