Size and proximity of U.S. economy--largest in the world--makes diversifying Canadian exports to other markets difficult

VANCOUVER, BC, June 11, 2026 /CNW/ - Despite the federal government's pledge to double exports to markets other than the United States by 2035 and reduce Canada's dependence on trade with the U.S., doing so will be very difficult given the size, strength and close proximity of the U.S. market, finds a new essay released by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

"It is perhaps not surprising that Canada's export infrastructure and the main focus of Canadian exporters have for many years pointed largely towards the United States: The world's largest market and our only neighbour," said Jock Finlayson, senior fellow at the Fraser Institute and co-author of The Gravity Model and Efforts to Diversify the Markets for Canadian Exports.

The study finds that Canada's reliance on the U.S. market for exports decreased slightly in relative importance from 1999 to 2011 but remained essentially unchanged over the period 2011 to 2024.

The proximity and the large size of the U.S. economy (and its relatively strong economic growth compared to most other industrial countries) has served to reinforce Canada's reliance on the U.S. as a market for its exports.

As such, much of Canada's trading infrastructure (highways, railways, pipelines, etc.) has been designed to facilitate trade with the U.S.--as has the existing regional Canada-U.S.-Mexico Agreement (CUSMA).

In order to diversify Canada's trade away from the U.S., substantial investments would have to be made to develop offshore markets and to improve and expand Canadian rail and port infrastructure. The latter step is necessary to reduce the cost of transporting products from Canada to non-U.S. markets.

Likewise, trade agreements with other nations to reduce or eliminate tariffs and non-tariff barriers to trade and direct investment would also help to facilitate some Canadian exports in non-U.S. markets.

"Even with substantial investments in new trade infrastructure and new trade deals, the favourable attributes of the U.S. market for Canadian exporters will make it very challenging to achieve Ottawa's goal of doubling exports to non-U.S. markets by 2035," said Steven Globerman, Fraser Institute senior fellow and study co-author.

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, Montreal, and Halifax and ties to a global network of think-tanks in 87 countries. Its mission is to improve the quality of life for Canadians, their families and future generations by studying, measuring and broadly communicating the effects of government policies, entrepreneurship and choice on their well-being. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org

SOURCE The Fraser Institute

MEDIA CONTACT: Jock Finlayson, Senior Fellow, Fraser Institute, Steven Globerman, Senior Fellow, Fraser Institute; To arrange media interviews or for more information, please contact: Bryn Weese, Fraser Institute, [phone] ext. 589, [email protected]