President Trump is threatening to impose increased tariffs on Canadian goods entering the U.S. and has added that the U.S. does not need Canadian oil, gas, autos, or lumber. While this may seem like a political move, it highlights a critical issue for Canada: its overdependence on the U.S. as its primary trading partner.
In 2023, Canada’s exports to the U.S. accounted for approximately 73% of its total exports, with the majority consisting of crude oil, automobiles, and softwood lumber. This reliance creates vulnerabilities, as any shifts in U.S. trade policy can have a significant impact on the Canadian economy. The softwood lumber dispute, for example, has cost Canadian exporters billions of dollars over decades due to ongoing tariff battles.
However, Canada has numerous untapped trade opportunities with other nations. For years, Canada and its business community have signed trade agreements but failed to implement or pursue them seriously. One example is the Comprehensive Economic and Trade Agreement (CETA) with the European Union, which has not yielded the expected benefits due to underutilization and regulatory barriers. Similarly, Canada signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), opening doors to markets in Asia and Latin America, but exports to these regions remain relatively low compared to potential.
Africa, particularly Nigeria, represents another missed opportunity. Nigeria, often referred to as Africa’s economic giant, has a GDP of over $500 billion and is a leading oil producer with vast potential in sectors like agriculture, technology, and infrastructure. Despite the Canada-Nigeria Foreign Investment Promotion and Protection Agreement (FIPA) signed in 2014, trade between the two countries remains minimal. In 2022, Canadian exports to Nigeria were valued at only $441 million, a fraction of Canada’s overall trade. Meanwhile, countries like China and India have aggressively tapped into Nigeria’s markets, signing major infrastructure and energy deals.
Canada’s approach to trade diversification must go beyond signing agreements. It requires targeted strategies to engage these markets, promote Canadian businesses abroad, and provide support for exporters entering new territories. For example, investing in trade missions, reducing regulatory barriers, and establishing cultural and business partnerships can help Canadian businesses make inroads into markets like Nigeria and the rest of Africa.
In conclusion, President Trump’s tariff threats should serve as a wake-up call for Canada to reduce its reliance on the U.S. market. By seriously pursuing underutilized agreements like CETA and CPTPP and exploring new opportunities in emerging markets such as Nigeria, Canada can build a more resilient and diverse trade portfolio. The time for action is now – Canada must embrace global trade opportunities to secure its economic future.
