In the latest episode of Trump’s Trade War, publisher of The Hub Rudyard Griffiths speaks with Alicia Planincic, director of policy and economics at the Business Council of Alberta.
To read Alicia’s full analysis, click here.
Key points:
- Heavy reliance on the U.S.: 17 out of the top 25 export categories rely on the U.S. for over 60 percent of their revenue.
- Limited progress on diversification: Despite decades of discussion, Canada has made little progress in diversifying its export markets, leaving the economy vulnerable to U.S. trade policy shifts.
- Infrastructure is key: Successful diversification, as seen in the mining sector, requires significant investment in trade infrastructure, including pipelines, roads, rail, and ports.
In this episode of Trump’s Trade War, Alicia Planincic, director of policy and economics at the Business Council of Alberta, delved into Canada’s heavy reliance on the United States for trade and the challenges of diversifying its export markets. With President Trump’s tariff threats looming, the conversation around reducing Canada’s dependency on the U.S. has gained urgency, but Planincic’s analysis suggests that achieving meaningful diversification will be a long and difficult process.
Planincic began by highlighting the stark reality of Canada’s trade relationship with the U.S. “Canada is extremely reliant on the U.S. to buy our exports,” she said. This dependency, while beneficial during stable times, becomes a vulnerability when trade relations sour. Planincic’s research shows that this reliance is not limited to a few sectors but spans across Canada’s top exports, including energy, manufacturing, and agriculture. “Most of our major exports really rely on the U.S. for sales,” she explained, with 17 out of the top 25 export categories depending on the U.S. for over 60 percent of their revenue, and eight of those relying on the U.S. for nearly 90 percent or more.
Despite decades of discussions about diversification, Planincic’s data reveals little progress. “There hasn’t been a lot of change even in these individual product categories over the last couple of decades,” she noted, emphasizing that Canada’s export strategy remains heavily concentrated in the U.S. market. This lack of diversification leaves Canada vulnerable to shifts in U.S. trade policy, such as the current tariff threats from the Trump administration.
However, Planincic pointed to a few success stories, particularly in the mining sector, which has managed to diversify its markets and increase overall exports. “It wasn’t just that they stopped selling to the U.S. or sold less to the U.S. They really increased their overall exports,” she said, highlighting the importance of growing trade rather than simply shifting it. The mining sector’s success was driven by increased demand from Asian markets, particularly China, demonstrating that diversification is possible with the right infrastructure and market access.
Planincic stressed that infrastructure is key to achieving broader trade diversification. “What we need to really reach other markets is that trade infrastructure in place,” she said, pointing to pipelines, roads, rail, and ports as critical components. She cited a striking statistic: 90 percent of Canadians view the country’s trade infrastructure as being in bad shape, with businesses reporting significant deterioration in recent years. Without substantial investment in infrastructure, efforts to diversify trade will remain limited.
In the short term, Planincic argued that mending the trade relationship with the U.S. should be Canada’s top priority. “The biggest takeaway for me in the short term from this data is just how reliant we are on this trade relationship and on it working,” she said. While long-term diversification is a worthy goal, the immediate focus must be on preserving the economic benefits of the U.S.-Canada trade relationship.
Generative AI assisted in the production of this story. If you are quoting from or referencing this episode, please refer to the audio to verify.
