Carney is pushing hard to diversify trade. But will businesses leap into foreign markets?

Prime Minister Mark Carney is working overtime to diversify trade away from the United States – and forging a deeper alliance with the European Union is pivotal to his strategy.

Mr. Carney did not name the U.S. during his address to the European Parliament on Thursday. But President Donald Trump’s global trade war provided the backdrop for his remarks.

The Prime Minister made pointed comments about the weaponization of trade, the coercive use of tariffs and the exploitation of global supply chains. He also welcomed European Commission President Ursula von der Leyen’s proposal to make Canada the first associate member of the EU as part of a joint effort to shore up economic resilience.

“We are not fair-weather allies,” Mr. Carney said. “We do not pursue zero-sum deals.”

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Offering his vision for a future partnership, Mr. Carney spoke of collaboration in areas including energy, critical minerals, financial services, defence and digital trade. His comments echoed those of Ms. von der Leyen, who proposed building on the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA.

Said Ms. von der Leyen: “We will move from CETA to an alliance for the future to create a common prosperity and economic security space.”

Mr. Carney is pushing hard to reduce Canada’s reliance on the U.S. market. The reality is, however, that Canadian companies must do the heavy lifting to achieve his stated goal of doubling non-U.S. exports by 2035.

That means Mr. Carney’s daring trade ambitions must be matched by a determined mindset shift in the business community to make better use of existing international trade deals. Entrepreneurs and executives must also pluck up the courage to manufacture higher-value products and develop more tolerance for financial risk.

Canada has 15 trade agreements that cover some 51 countries. Those pacts include CETA and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, which involves Indo-Pacific countries.

Domestic businesses, though, have been slow to capitalize on the preferential market access afforded by those mega trade deals because of the geographic proximity of the U.S. market.

In 2024, 70 per cent of Canadian exports were shipped to the U.S. In contrast, only 4 per cent wound up in CETA markets and 8 per cent were delivered to CPTPP countries that year.

It is also estimated that only 15 per cent of Canadian small and medium-sized businesses exported their goods and services in 2023.

With respect to the EU, Canada recorded trade deficits of $48.8-billion for merchandise and $7.1-billion for services in 2025.

The utilization rate of CETA preferences for Canadian exports to the EU – which measures the extent to which eligible products actually claim preferential tariffs under the trade pact – was 65.4 per cent in 2021, suggesting room for improvement.

U.S. protectionism underscores why Canadian businesses can no longer afford to forgo revenue from other foreign markets.

“Most of our companies have just gone to the U.S.,” Alison Nankivell, president and chief executive officer of Export Development Canada, said at an event at the Canadian Club Toronto on Thursday.

“And by the way, it’s very easy to do business in the U.S., and so you develop at a scale and at a cadence that probably is good enough to have a good living.”

Geographic proximity, a common language and shared commercial norms naturally underpin the Canadian business community’s preference for doing trade south of the border.

But a recent EDC survey found that 72 per cent of exporters plan to enter new markets over the next two years.

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Ms. Nankivell pointed out that Canada’s banks can assist that effort by getting comfortable with financing global market opportunities.

“We need to build up the risk appetite of banks to have concerted discussions with especially the mid-size companies, to be able to support trade into markets in Europe, into the Middle East, into Africa, into Asia,” she said, adding that EDC can function as a guarantee partner to mitigate risks.

Trade financing is clearly top of mind for Ottawa.

During his speech, Mr. Carney proposed that Canada and Europe explore “an integrated market for financial services” to improve access to capital for companies.

EDC estimates that Canada has a $100-billion opportunity to capture more value from trade if businesses create higher-value products and strengthen their positions in global supply chains.

The federal export credit agency, which released a new report on Thursday, stressed that these ought to be complementary goals to trade diversification.

Although the U.S. will always be Canada’s largest export market, Ms. Nankivell said businesses are finally recognizing that Washington’s trade policies are not going back to normal.

“It doesn’t matter who the next government is in the United States,” she said. “Tariffs are a part of life in terms of the U.S.-Canada relationship, I think, going forward.”

Canadian business leaders are understandably daunted by the prospect of leaping into foreign markets. But Mr. Trump’s economic coercion is also making it risky for them to stand still.