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Familiar Friction vs. Uncharted Risk: Navigating Trade Relations

John F. Kennedy famously said, "Geography has made us neighbors. History has made us friends. Economics has made us partners." This Canada-U.S. relationship we have known and cherished for decades creates stability and mutual prosperity.

We share the world's largest trading relationship, an integrated electricity grid and airspace defense (NORAD). Roughly 73% of Canadian exports flow to the U.S., and nearly half of our imports come from the U.S. Interdependent supply chains and border operations are tied to millions of jobs on both sides. Working together, we each benefited.

Like many neighbours, a historical look back will show recent tensions aren't all that new. In the 1930s and again in 1970, there were conflicts about import surcharges and access to markets. Then, as now, Canada looked to diversify trade to reduce vulnerability.

What feels different this time are the trade partners we are now pursuing.

In the past, we pursued trade with European partners, but today Canada is exploring relations with countries that are far less transparent.

  • China – Established a quota for 49K Chinese EVs at normal duty rate.

  • India – Talks towards doubling bilateral trade to $70B by 2030.

Both countries have faced allegations of past election interference in Canada.

Canada is also actively encouraging foreign direct investment, and it seems to be paying off. Foreign direct investment reached $96.8 billion in 2025, up from $86.6 billion in 2024 – the highest annual inflow since 2007.

The tension with the U.S. requires Canada to act – by using our resources, building domestic strength and expanding trade. Diversification must be done carefully. New partners offer real opportunities, but they also bring less transparency and higher risks. Canada must balance growth with a clear understanding of the risks.

Karam Lal Signature

Karam Lal

Canada
Branch Manager

09/10/2026 08:42:39 PM; CNWEB26 -0-0/0.0-1- 00000000-0000-0000-0000-000000000000