Can America win ‘Trade War’ with Canada?

Washington may be able to impose greater costs on Canada, but by weaponising its largest market, it is encouraging its closest economic partner to build alternatives to American dependence and change the centrality of the American market for ever.

Canada Is Adapting Faster Than Washington Expected

There is no doubt that Canada, in this war, will bear costs. It imports more from the US than it exports. Its economy remains heavily dependent on the United States, and many Canadian industries have spent decades building production around access to the American market. More than 90 per cent of Canadian-made vehicles and 60 per cent of Canadian-made auto parts, for example, are exported to the United States. But that vulnerability is precisely what makes Canada’s response important. Ottawa is not simply trying to persuade Washington to restore the old relationship. It is adapting to the possibility that the old relationship may never return. Prime Minister Mark Carney has been unusually explicit about this. In announcing the collapse of the latest negotiations, he said Canada had recognized that “America has changed” and would focus on building its strength at home while diversifying its international partnerships.

The strategy is already producing measurable changes. Canada’s 2026 State of Trade report found that exports to the United States fell 3.7 per cent in 2025, while exports to non-US markets increased 11.1 per cent. The share of Canadian exports going to non-US destinations consequently reached 32.8 per cent, its highest level in more than four decades. That does not mean Canada is replacing the United States. Nor can it do so quickly. American demand,........

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