Canada has spent decades becoming one of the world’s most connected free-trading economies, yet one number still defines its commercial reality: the United States remains by far its largest customer. Former CUSMA chief negotiator Steve Verheul argues that changing that relationship will require far more than negotiating another collection of trade agreements. His warning arrives as Canada faces a renewed tariff confrontation with Washington and political pressure to build stronger commercial ties elsewhere. The challenge is that Canada already has preferential access to dozens of countries. What it often lacks are the infrastructure, investment, production capacity and sustained commercial strategies required to turn access into actual sales. Diversification, in that telling, is not primarily a diplomatic exercise. It is a long-term rebuilding project for the Canadian economy.
Verheul Says Another Trade Deal Is Not the Missing Ingredient
Steve Verheul knows the architecture of Canadian trade unusually well. He served as Canada’s chief negotiator for both CUSMA and the Canada-European Union Comprehensive Economic and Trade Agreement, and earlier worked on the original NAFTA negotiations. In a Public Policy Forum report released September 10, 2026, he argues that Canada cannot simply negotiate its way out of its dependence on the United States. Ottawa needs to protect as much access to the American market as possible while simultaneously developing the capacity to sell more goods and services elsewhere.
That distinction matters because Canada already possesses something many countries would envy: an extensive network of preferential trade agreements. Verheul’s argument is that treaties can remove tariffs and establish rules, but they cannot make a Canadian company build a new plant, persuade an overseas buyer to sign a contract, expand a congested port or finance a pipeline, mine or processing facility. The harder work starts after negotiators put down their pens. Market access creates an opportunity; businesses, infrastructure and investment determine whether Canada actually captures it.
Dependence on the U.S. Has Fallen, but It Is Still Enormous
There are signs that diversification is already occurring. Statistics Canada reported that Canadian merchandise exports to the United States totalled roughly $50.5 billion in July 2026, compared with about $76.1 billion in exports worldwide. That put the U.S. share near 66%, a striking decline from the roughly three-quarters of merchandise exports that routinely went south only a few years earlier. Verheul’s report notes that the July share was the lowest since 1997 outside the pandemic period.
That shift should not be mistaken for economic separation. A market taking roughly two-thirds of a country’s merchandise exports remains overwhelmingly important. The scale becomes clearer when compared with individual alternatives: July exports to China were about $4.2 billion, while exports to the United Kingdom were approximately $6.7 billion. Neither comes close to replacing the United States. For a Canadian manufacturer accustomed to selling into Ohio or Michigan through an integrated North American supply chain, replacing an American customer may require finding several customers across several countries—and then solving the transportation, regulatory and financing problems involved in reaching them.
Canada Already Has an Extraordinary Number of Open Doors
If trade agreements automatically produced diversification, Canada would probably have achieved it already. The federal Trade Commissioner Service says Canada has 15 free-trade agreements covering 51 countries and roughly 61% of global GDP. That network includes CUSMA, CETA with the European Union and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which gives Canadian companies preferential access across major Asia-Pacific economies including Japan, Australia, Vietnam and Malaysia.
Those agreements are valuable. They can lower tariffs, establish predictable rules and make Canadian products more competitive than goods from countries without equivalent access. But preferential treatment only matters when companies use it. A seafood processor in Atlantic Canada, an Alberta agricultural exporter or an Ontario technology company still has to identify customers, comply with local regulations, arrange shipping, manage currency and credit risks and sometimes redesign products for a new market. That is why Verheul argues the next stage should focus less on celebrating signed agreements and more on converting them into contracts, investment and export growth.
Europe Shows Why Market Access Does Not Guarantee Market Share
Canada’s experience with Europe illustrates the problem. CETA created extensive preferential access to a wealthy market, yet Verheul points to Canadian beef as an example of why simply eliminating tariffs does not erase commercial obstacles. European requirements differ from North American standards, including rules affecting hormones and processing practices. For a producer already operating efficiently for U.S. customers, changing production systems for a relatively small volume of European sales may simply not make financial sense.
The same principle applies far beyond agriculture. Companies entering unfamiliar markets encounter different certification requirements, consumer preferences, distribution networks, languages and business practices. Verheul’s report says Global Affairs Canada estimates that only about 60% of the potential value offered through the EU agreement is being harnessed. That does not mean CETA failed. It demonstrates the difference between theoretical access and commercial utilization. A trade agreement can unlock the front door, but exporters still need a reason to walk through it—and enough potential profit to justify learning an entirely different marketplace.
The Canada-U.S. Economy Was Built to Cross the Border Repeatedly
Geography is only part of Canada’s dependence. Decades of North American economic integration have created production systems that treat the border less like the end of a market and more like another stop on an assembly line. Verheul highlights automotive manufacturing, where components and partly assembled products can cross the Canada-U.S. border repeatedly before a finished vehicle reaches a dealership. Some vehicles, his report notes, can cross the border as many as eight times during production.
That is why diversification becomes especially difficult for Ontario’s automotive sector and other advanced manufacturers. Selling a barrel of oil, tonne of potash or shipment of grain to a different country is challenging but comparatively straightforward. Relocating a complex manufacturing supply chain built around suppliers, plants, standards and customers on both sides of the Canada-U.S. border is something else entirely. Factories cannot quickly substitute Tokyo or Berlin for Detroit when their production processes were designed around continental integration. For those sectors, resilience may mean preserving North American manufacturing while gradually creating alternative customers, suppliers and investment relationships rather than attempting an abrupt break.
Ports, Railways and Trade Corridors May Matter More Than Another Signing Ceremony
Diversification also has a physical dimension. Canadian resources can be commercially attractive in Asia or Europe and still struggle to reach those markets economically if ports, rail lines and connecting infrastructure lack capacity. Verheul therefore recommends a national trade-enabling infrastructure strategy identifying the gateways and corridors Canada would need to move substantially larger volumes toward non-U.S. customers. It is a reminder that geography helped create U.S. dependence in the first place: trucking a product south can be much easier than transporting it thousands of kilometres to a Canadian port.
Ottawa has already begun spending in that direction. The federal trade-diversification strategy includes a $5-billion Trade Diversification Corridors Fund aimed at ports, railways, airports, highways and other strategic infrastructure. Budget 2025 also identified projects around the Great Lakes–St. Lawrence corridor, western rail and port capacity and northeastern Quebec. The logic is straightforward. A trade mission can introduce an exporter to a buyer in Seoul, but if the exporter cannot move enough product reliably and competitively to the Pacific coast, the commercial opportunity may never become a durable export business.
Canada Has to Become More Competitive Before It Can Diversify
Verheul’s argument also turns the diversification debate inward. Canada cannot expect exporters to conquer more demanding international markets while investment growth, productivity and project execution remain persistent concerns. His report proposes a “competitiveness test” for major tax, regulatory and policy decisions affecting export-oriented businesses. The idea is not that every regulation should disappear, but that governments should explicitly consider whether new costs make Canadian producers less competitive against American, European or Asian rivals.
Internal trade is another part of the equation. More than $500 billion worth of goods and services moves among Canadian provinces and territories each year, according to the federal government, representing close to one-fifth of GDP. Ottawa has been removing federal internal-trade and labour-mobility barriers, while provinces have pursued mutual-recognition measures of their own. For a growing exporter, a more integrated domestic market can create scale before the business attempts global expansion. It is difficult to argue Canada must trade more seamlessly with Europe and Asia while permitting avoidable regulatory duplication to complicate commerce between its own provinces.
The Strategy Is Not to Abandon CUSMA
The central message can easily be misunderstood as a call to pivot away from the United States. Verheul argues almost the opposite. His preferred approach has two tracks: aggressively expand Canada’s relationships with other markets while preserving as much preferential American access as possible. That distinction has become increasingly important since the July 1 CUSMA joint review. Canada and Mexico supported extending the agreement, while the United States declined to renew it at that stage, triggering annual reviews. CUSMA nevertheless remains in force and, under its existing provisions, continues until 2036 unless circumstances change.
For Canadian companies, preserving that framework remains crucial. The federal government says goods and services trade among the three CUSMA countries increased by nearly 39%, or $741 billion, after the agreement came into force. Verheul specifically stresses protecting integrated sectors such as autos, steel and aluminum while avoiding arrangements that would limit Canada’s ability to negotiate with countries outside North America. The objective is therefore not choosing America or the rest of the world. It is avoiding a future in which Canada has no meaningful alternative when relations with Washington deteriorate.
Resources Could Diversify Faster Than Manufacturing
Not every industry starts from the same position. Verheul identifies energy and natural resources, advanced manufacturing, transportation infrastructure and professional, scientific and technical services among strategically important areas, while agriculture, agri-food, seafood and defence also offer opportunities. In the near term, however, diversification may tilt Canada’s export mix somewhat toward commodities and resources because those products are easier to redirect between markets than highly integrated manufactured goods.
Recent trade figures illustrate that possibilities exist. In 2025, merchandise exports to countries other than the United States increased 17.2%, while total merchandise trade with non-U.S. countries rose 14.3% to $553 billion. Meanwhile, the U.S. share of Canadian merchandise exports fell from 75.9% in 2024 to 71.7% in 2025 before dropping further in 2026. Those movements show companies can redirect trade when conditions change. Still, diversification based primarily on commodities would create its own vulnerabilities. The bigger prize would be combining resource exports with processing, technology and higher-value manufacturing that allow more income and employment to remain in Canada.
The Real Test Is Whether Canada Can Turn Access Into Business
Verheul’s seven recommendations ultimately form an execution agenda. They call for unlocking investment in major projects, developing trade-enabling infrastructure, testing policies for competitiveness, pursuing the two-track U.S.-and-global strategy, converting agreements into actual commercial deals, using faster sector-specific agreements where appropriate and establishing an economic-security framework to guard against coercion, dumping and dependence on unreliable suppliers. None offers the satisfaction of a single dramatic announcement. Together, however, they address many of the practical reasons previous diversification campaigns produced limited results.
The federal government has set an ambitious target of doubling non-U.S. exports over a decade and generating roughly $300 billion in additional trade. Reaching anything close to that goal would require years of sustained business investment and government follow-through. Canada’s relationship with the United States was built over generations through geography, infrastructure, regulation, corporate investment and integrated supply chains. No trade agreement created that dependence overnight, and another trade agreement cannot undo it overnight. Verheul’s warning is ultimately less about abandoning free trade than recognizing its limits: treaties create possibilities, but an economy has to build the capacity to use them.
