The Fraser Institute, web image
VANCOUVER, B.C. — Canada’s goal of significantly reducing its reliance on the United States as an export market will be difficult to achieve because of the size, strength and proximity of the American economy, according to a new study from the Fraser Institute.
The report examines Canada’s trade patterns and finds the United States has remained Canada’s dominant export market despite efforts over the years to diversify international trade.
Researchers found Canada’s dependence on the U.S. market declined modestly between 1999 and 2011 but remained largely unchanged from 2011 through 2024.
The study says the world’s largest economy continues to offer Canadian exporters advantages that are difficult to replicate elsewhere, including geographic proximity, strong economic growth and established trade relationships under the Canada-United States-Mexico Agreement.
The report also notes much of Canada’s existing trade infrastructure, including highways, railways and pipelines, has been developed to support exports moving south to the United States.
Researchers say expanding trade with overseas markets would require significant investments in transportation infrastructure, including rail networks and port facilities, to reduce shipping costs and improve access to international customers.
The study also points to the need for additional trade agreements aimed at lowering tariff and non-tariff barriers in foreign markets.
The federal government has pledged to double Canadian exports to markets outside the United States by 2035 as part of broader efforts to diversify trade and reduce economic dependence on Canada’s largest trading partner.
However, the report concludes that even with major infrastructure investments and new trade agreements, the advantages of the U.S. market will make reaching that target challenging.
The study was authored by Fraser Institute senior fellows Jock Finlayson and Steven Globerman.
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