Canada is making a deliberate shift to reduce its economic reliance on the United States, targeting a doubling of non-U.S. exports within the next ten years. This ambition has gained significant urgency due to recent U.S. tariffs, which saw Washington impose 50% duties on approximately C$28 billion of Canadian goods in August 2026, following earlier tariffs on sectors like steel and lumber. This move by Canada is not intended to completely replace the massive American market but rather to provide Canadian businesses with more diverse sales avenues when trade conditions with the U.S. become unpredictable.
Asia is central to Canada's new strategy, with ongoing negotiations with India, ASEAN, and the Philippines, alongside renewed commercial engagement with China and new Pacific energy infrastructure projects. While 71.7% of Canadian merchandise exports went to the U.S. in 2025, down from 75.9% in 2024, the U.S. share fell further to 66.3% in July 2026, as exports to other countries climbed to 33.7% of the total for the month. Merchandise exports to non-U.S. countries increased by 17.2% in 2025, and continued this momentum into 2026, with a 7.4% rise in July alone, reaching a record $25.6 billion. China, the Netherlands, and Germany were key contributors to this increase.
Canada benefits from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which connects it to major Pacific markets such as Japan, Australia, Vietnam, Malaysia, and Singapore. The UK recently joined as the 12th member, expanding the agreement's reach. This framework reduces tariffs and establishes common rules for services, investment, government procurement, and product origin, facilitating access to these markets. The Canadian government is actively working to translate this negotiated access into actual sales, particularly for smaller Canadian companies accustomed to the U.S. market.
Recent diplomatic efforts highlight the rapid progression of Canada's Asian trade push. International Trade Minister Maninder Sidhu was in Mumbai on September 18-19 to advance negotiations for a Canada-India comprehensive economic partnership agreement, and then attended ASEAN economic meetings in Manila on September 21-22. Canada is pursuing both an ASEAN-wide agreement and a separate free-trade agreement with the Philippines, aiming to triple bilateral trade with the Philippines by 2035 from C$3.4 billion in 2025. An ASEAN agreement could add nearly C$2 billion to Canadian GDP and support about 14,000 jobs, with agriculture, forestry, energy, minerals, aerospace, and advanced services identified as key growth sectors. Energy exports to Asia are notably increasing, with crude oil exports to destinations other than the U.S. reaching $10 billion in 2025, and oil exports to China and South Korea rising by 122% and 227% respectively in the first four months of 2026.
