Canada's current trade relationship with the United States is front and centre in the national conversation — and for good reason. With ongoing tariff pressures and renewed calls to diversify Canada's export markets, it's worth asking: have past efforts to reduce our dependence on the U.S. actually worked?
ICBA Chief Economist Jock Finlayson, writing as a Senior Fellow at the Fraser Institute, tackles that question head-on in a newly published study co-authored with Steven Globerman: Assessing Canada's Trade Dependence on the United States, 1999 to 2024.
What the Research Found
The report examines 25 years of Canadian trade data and arrives at a sobering conclusion: despite repeated efforts by successive federal governments to diversify Canada's export base, our dependence on the U.S. market has barely budged.
While the share of Canadian merchandise exports going to non-U.S. markets did increase between 1999 and 2011, that progress essentially levelled off and remained flat through 2024. Canada has fared somewhat better on the services side — the share of services exports going to countries other than the United States grew more consistently over the same period — but merchandise trade remains heavily U.S.-oriented.
Among non-U.S. trading partners, China stands out as the most prominent destination for Canadian exports, reflecting that country's rapid economic growth over the past quarter century.
Trade Flows Are "Sticky"
One of the study's key insights is that trade patterns are remarkably difficult to shift. Finlayson and Globerman describe the geographical distribution of Canada's trade flows as relatively "sticky" — meaning that even sustained policy efforts, including new trade agreements with other partners, have had only modest effects on where Canadian goods and services actually end up.
This has direct implications for the current moment. As Ottawa prioritizes export diversification in response to U.S. tariff threats, the historical record suggests the road ahead will be a long one.
Why This Matters for B.C. Business
For B.C.'s construction and broader business community, the findings are a useful reality check. Trade diversification is a worthy goal, and efforts to build stronger commercial ties with Asia-Pacific markets, Europe, and beyond deserve support. But businesses shouldn't plan around a rapid reorientation of Canada's trade relationships — the data suggest meaningful change takes decades, not years.
In the meantime, managing the Canada-U.S. trade relationship effectively remains the single most important economic policy priority for Canada. Stability, predictability, and a strong working relationship with our largest trading partner aren't just nice to have — they're essential.
You can read the full Fraser Institute study here.