Gravity Always Wins: Why Diversifying Canada's Trade Is Harder Than Ottawa Admits

Prime Minister Carney has promised to double Canada's non-US exports within a decade, backed by a $10-billion Trade Diversification Corridor Fund. A new Fraser Institute study, co-authored by ICBA Chief Economist Jock Finlayson and Senior Fellow Steven Globerman, explains why that's a steep climb.

The reason is the "gravity model" of trade — and it's exactly what it sounds like. Trade flows toward big economies that are close by. The US is the largest economy on earth, $23.8 trillion and 27% bigger than China, sitting right on our border. Seventy per cent of Canadians live within 100 km of it. Shipping from Vancouver to Los Angeles is 1,245 nautical miles; to Shanghai, it's 5,151.

The kicker: trade agreements have no measurable effect on energy and mining exports — 40% of what Canada sells abroad. Deals won't do it. Building will.

If Ottawa is serious about diversification, the money has to go into ports, rail, and pipelines — and into earning the world's trust as a reliable supplier.

Read the full study HERE.