Canada III: The Neighbor Who Started Moving the Furniture

“When a great power threatens to close a door, it may discover too late that the neighbor has learned how to build others.”

This is the third column devoted to Canada.

Canada I examined the tariff dispute with the United States and trade dependence as a strategic vulnerability. Canada II showed how that diversification was beginning to take shape toward new markets. Canada III now looks at Canada’s strategic weight, its resources, its geography, and the new doors opening toward Europe and the world.

I. “THE NEIGHBOR NO LONGER LOOKS ONLY SOUTH”

For decades, Canada built one of the deepest economic relationships on the planet with the United States. In 2024, 75.9% of its merchandise exports were destined for the U.S. market. In 2025, that share fell to 71.7%. This does not mean divorce or sudden economic independence, but it is a signal. When a trade relationship also begins to become an instrument of political pressure, the dependent partner inevitably starts looking at the other doors in the house.

Donald Trump’s tariff policy accelerated that movement. In July, Washington announced new 50% tariffs on various Canadian products, while Ottawa later responded with measures targeting U.S. goods. Canada cannot replace overnight the enormous market sitting just across a border nearly 9,000 kilometers long. Nor can the United States erase decades of integrated supply chains with a decree. Geography tends to be considerably less obedient than presidential speeches.

The numbers show, however, that something is moving. In 2025, Canadian merchandise exports to the United States fell by C$29.4 billion, while those destined for the rest of the world increased by C$27.6 billion. And in July 2026, exports to countries other than the United States reached a monthly record of C$25.6 billion. It is not yet a trade revolution. But when the furniture starts moving, it is worth looking at who is pushing it.

“The neighbor looked South for 100 years. Now it has discovered that the East and the West exist.”

II. “EUROPE DISCOVERED THAT CANADA WAS ON THE OTHER SIDE OF THE ATLANTIC”

On September 16, Ursula von der Leyen opened an unexpected door by suggesting that Canada could become a kind of first “associate member” of the European Union. The expression still lacks a defined legal architecture, and several European governments continue to have questions about what it would entail. Canada is not asking to become the Union’s 28th country either. The important thing is not the name. The important thing is that Brussels and Ottawa are discussing a considerably deeper relationship.

A day later, Mark Carney addressed the European Parliament. He put critical minerals, energy, defense, artificial intelligence, digital trade, and new supply chains on the table. These are precisely the sectors where global competition is intensifying. Europe needs energy and minerals. Canada possesses enormous natural resources, institutional stability, technology, and access to the Atlantic, Pacific, and Arctic Oceans. It does not take much diplomatic romanticism to discover that both sides have concrete reasons to talk.

Trump reacted by calling the European proposal “laughable” and warned of possible trade consequences if Washington considered that rapprochement hostile. Europe replied that its international relationships cannot be determined from Washington. Carney avoided entering a war of adjectives and focused his response on the substance of the partnership. It is a curious situation. For decades, the United States asked its allies to assume greater responsibilities. When one of them begins seeking greater autonomía, apparently that is not quite so entertaining either.

“Europe discovered Canada. Washington discovered that it did not like the discovery.”

III. TRUMP DISCOVERS POTASH

On September 21, a new chapter appeared. Trump announced that the United States is working on a major agreement to buy potash from Belarus, claiming it could obtain it at a substantially lower price than what it currently pays Canada. Potash is essential for fertilizers, and Canada supplies the overwhelming majority of U.S. imports. Suddenly, a relatively obscure agricultural mineral ended up becoming a piece on the North American geopolitical chessboard.

The idea, however, has a small inconvenience called geography. Canada is attached to the United States. Belarus is not. Sanctions and the closure of traditional routes through the Baltic require consideration of far more expensive routes, including through the Russian Arctic. Fertilizer market analysts have also questioned whether Belarusian potash could substantially change U.S. prices. The United States is not currently facing a significant potash shortage; its greatest difficulties are in nitrogen and phosphates.

There is also a considerable geopolitical irony. To reduce dependence on Canada, a historic ally, Washington is exploring purchases from Belarus, which is closely tied to Russia. This does not mean the operation is impossible or necessarily commercially irrational. It simply means that supply chains have consequences. If every product begins to be selected according to the political temperature of the day, a sack of fertilizer may end up traveling halfway around the planet to avoid crossing a land border.

“Trump found potash in Belarus. Geography has not yet been informed.”

IV. “CANADA ALSO LEARNED TO USE THE CALCULATOR”

Ottawa is not calmly contemplating the scenery either. On September 21, it introduced legislation intended to reduce the federal review process for major natural-resource and infrastructure projects to approximately one year. The formula seeks to carry out simultaneously procedures that previously could unfold sequentially, while maintaining consultations with Indigenous peoples. The political and economic objective is obvious. Canada wants to build faster and reduce some of its vulnerabilities to external trade pressure.

Here come oil, liquefied natural gas, copper, nickel, uranium, potash, iron, rare earths, and numerous strategic minerals. Canada possesses resources that the industrial world needs precisely when the great powers are trying to secure supply chains. Even LNG Canada is considering a second phase that could double its capacity to approximately 28 million tonnes annually. Part of that production could be directed toward Asian markets and eventually strengthen Canada’s energy alternatives.

But it would also be unwise to turn Canada into Superman wearing a winter coat. Building ports, railroads, processing plants, mines, LNG terminals, and new energy connections requires years and tens of billions of dollars. Dependence on the United States remains enormous. That is precisely why what is happening matters. Canada is not replacing the United States. It is trying to make sure that the United States is no longer practically the only large door in its house.

“Canada took out the calculator. It came with a world map too.”

V. “THE BILL ALSO ARRIVES IN OTTAWA”

Trade wars are never free. The Bank of Canada warned on September 21 that the new U.S. tariff escalation could reduce Canadian fourth-quarter 2026 growth to below 1%. Before that escalation, growth of around 1.5% had been expected. Uncertainty can delay investment and hiring precisely when Ottawa needs to accelerate both. Canada is diversifying, but it is paying to do so.

Canadian inflation stands at around 3%, above the Bank of Canada’s 2% target. Added to that is oil near US$100 per barrel as a result of tensions in the Middle East. An uncomfortable equation emerges for the central bank. Tariffs can reduce growth while energy can fuel inflation. Raising rates could cool the economy even further; keeping them too low could complicate price control. Geopolitics has also ended up entering the central bank governor’s office.

But there is another interesting figure. In July, Canadian exports to the United States fell 6.6%, while those destined for the rest of the world increased 7.4% and reached that record C$25.6 billion. The Netherlands, China, and Germany were among the destinations that drove the increase. Fully 33.7% of Canadian merchandise exports that month were already going to markets other than the United States. The southern door remains enormous. The others are growing.

“Tariffs are free until the bill arrives.”

VI. “THE LIONS ARE ALSO LOOKING NORTH”

The United States wants to preserve secure and competitive supply chains. The European Union needs energy, critical minerals, and reliable industrial partners. China remains an enormous global buyer of raw materials, and Canada has economic reasons to maintain trade channels with Asia. Russia appears indirectly through Belarus, the Arctic, and energy markets. India represents another gigantic potential market for resources, fertilizers, energy, and technology.

The Arctic adds another dimension. Global warming, new shipping routes, and competition for resources are turning northern Canada into strategic territory. Canada possesses one of the largest geographies on the planet and access to three oceans. What for a long time appeared to be periphery may progressively become a corridor. Ports, icebreakers, minerals, communications, and Arctic security will cease to be secondary issues if competition among the great powers continues.

Canada even joined in July as the first observer country in the next-generation fighter aircraft program being developed by the United Kingdom, Italy, and Japan. That does not mean abandoning the North American military structure tomorrow either. Canada remains deeply integrated with the United States through NORAD, NATO, and numerous industrial supply chains. But once again, the same word running through this entire story appears. Diversification. Other doors are beginning to appear in defense as well.

“The lions are looking north. It turns out there was meat there too.”

VII. “THE SAVANNAH ALSO HAS A CORNER IN THE ARCTIC”

The savannah may burn in the Middle East, Eastern Europe, or the Indo-Pacific. But it can also begin heating up quietly between countries that for decades we considered inseparable allies. Missiles are not required to alter a balance. Tariffs, fertilizers, minerals, ports, pipelines, energy contracts, and business decisions accumulated over years are enough.

The United States is trying to demonstrate that it can replace Canadian suppliers. Canada is trying to demonstrate that it can find buyers other than the United States. Europe is seeking to reduce vulnerabilities to the great powers. China sees commercial opportunities. Russia remains present through energy, the Arctic, and its relationship with Belarus. Each actor moves an apparently reasonable piece. The problem appears when everyone moves the board at the same time.

No one should exaggerate what is happening. Canada and the United States will still be neighbors tomorrow. No president can impose tariffs on geography. That is precisely why it is paradoxical to turn an integration built over generations into a permanent test of strength. Governments change. Borders remain.

“The savannah reached the Arctic. Fortunately, there is still ice up there.”

VIII. “THE NEIGHBOR STARTED MOVING THE FURNITURE”

Perhaps that is the most important consequence of this story. Canada does not need to break with the United States to change its international position. It only needs to gradually reduce its dependence. If Europe buys more minerals, if Asia receives more energy, if new ports connect Canada with other markets, and if a growing share of its exports finds alternative destinations, the bilateral relationship will remain enormous, but it will be different.

Nor is it written anywhere that this strategy will succeed. Logistics costs are enormous, Europe has its own economic and regulatory problems, China maintains a politically complicated relationship with Ottawa, and the United States will remain the closest natural market. Canadian diversification will be slow, expensive, and probably incomplete. But data already exist showing movement, and denying that movement would be as mistaken as prematurely announcing a continental separation.

Trump can buy potash from Belarus if he can find the price, ships, ports, and sellers. Canada can send minerals to Europe, LNG to Asia, and open new trade corridors if it can secure investment, infrastructure, and buyers. Every country will defend its interests. That is precisely what geopolitics is. What would truly be strange would be to expect that only one of them had the right to do so.

Canada is not moving out of the house yet. It simply started moving some furniture, opened the windows, and discovered that there were other doors. The United States can regard that as a threat or as a foreseeable consequence of using trade as an instrument of pressure. History will tell us how much the relationship really changes.

“Sometimes a great power builds a wall so no one can leave. Then it discovers that all it accomplished was teaching the neighbor where the other doors were.”

“Canada is not moving. It simply stopped having only one door.”

IX. “US$715 BILLION AND THEY ARE STILL ARGUING ABOUT WHO NEEDS WHOM”

It is worth stopping the speeches for a minute and opening the calculator. In 2025, the United States exported US$333.620 billion in merchandise to Canada and imported US$381.922 billion from Canada. Added together, the two directions represented approximately US$715.542 billion in trade in goods in just one year, almost US$2 billion per day. The United States recorded a bilateral deficit of US$48.302 billion. We are not talking about two strangers who met yesterday at a customs checkpoint. We are talking about two economies that have spent decades manufacturing, selling, buying, and transporting together.

And 2026 does not show Canada disappearing from the U.S. trade map. Between January and July, the United States had already exported US$205.476 billion to Canada and imported US$233.665 billion, another US$439.141 billion in merchandise crossing the border in just seven months. The accumulated U.S. deficit stood at US$28.190 billion. One can pronounce the word tariff every morning in front of a camera, but US$439 billion has the unpleasant habit of continuing to exist after the press conference is over.

From Ottawa, the picture is even more revealing. Canada exported C$776 billion in merchandise to the world during 2025 and imported C$807.1 billion. But the United States still received 71.7% of Canadian exports, although it had received 75.9% in 2024. On the other side, the U.S. share of Canadian imports fell from 62.3% to 58.8%. Canada continues to depend extraordinarily heavily on its neighbor, but both numbers are moving in the same direction. And that direction is called diversification.

Here appears the figure that should worry people more than a hundred speeches. In 2025, Canadian exports to the United States declined by C$29.4 billion, while those directed toward countries other than the United States increased by C$27.6 billion. Canada’s total trade with countries other than the United States reached C$553 billion, compared with C$484 billion in 2024, an increase of 14.3% in just one year. The United States remains gigantic for Canada. But the rest of the world also knows how to use a calculator.

There is another particularly uncomfortable figure. Canada maintained a merchandise surplus with the United States of approximately C$81.6 billion in 2025, although it had been C$101.3 billion in 2024. At the same time, its exports to non-U.S. countries increased 17.2%. No serious person can claim that Canada will replace the U.S. market tomorrow. Nor does it seem serious to claim that such a neighbor will eternally remain looking toward a single border while receiving trade threats from the other side.

That is perhaps the error in perspective. Washington looks at its US$28 billion bilateral deficit accumulated through July and can see it as a problem to correct. Ottawa looks at the fact that more than 70% of its exports still depend on the United States and can see it as a vulnerability to reduce. The same numbers produce opposite strategies. One tries to buy elsewhere. The other tries to sell elsewhere. And while both demonstrate who needs the neighbor less, approximately US$2 billion in merchandise every day quietly reminds them how much they still need each other.

Geography does not accept executive orders either. There are nearly 9,000 kilometers of border, pipelines, railroads, highways, power grids, factories, mines, and industrial supply chains built over generations. Moving a supply chain costs money. Building another costs even more. Finding potash in Belarus may be possible. Finding another Canada attached to the northern border of the United States looks slightly more complicated.

Perhaps that is the greatest irony of Canada III.

The United States is trying to teach Canada that it has alternatives. Canada appears to have understood the lesson perfectly and has begun looking for its own. The teacher may now discover that the student was taking notes.

“US$715 billion later, the two neighbors are still arguing about who can live without the other. The calculator, considerably less patriotic, has still not chosen a side.”

Author: Mauricio Herrera Kahn

Brief Bibliography

· Reuters, September 16–21, 2026. Canada–EU relations, U.S. tariff policy, Belarusian potash, Canadian infrastructure, and the Bank of Canada.

· Statistics Canada, Canadian International Merchandise Trade, 2025 data and July 2026.

· Statistics Canada, Recent Developments in the Canadian Economy, 2026.

· Reuters, July–September 2026. Canadian defense and LNG Canada expansion.

David Andersson