Canada’s Trade Diversification Isn’t Coming. It Has Already Started.

September 25, 2026 robcruise 0 Comments

Canada’s exports to China are surging, overseas markets are gaining ground, and an ASEAN agreement could bring further opportunities. Diversification has begun. The challenge is expanding it across more industries, more destinations, and more of the country.

A red maple leaf branches into several illuminated trade routes, surrounded by Canadian canola, copper, timber, energy, and finished manufactured products. — Canada’s trade routes are widening, but lasting diversification will depend on selling more Canadian products to more markets.

Canada sold $21.74 billion in merchandise to China during the first half of 2026, an increase of 30.1% over the same period last year. While much of the political conversation still treats trade diversification as something Canada must eventually accomplish, businesses are already changing where they sell. The question is how far that change reaches—and how much of the Canadian economy it can carry with it. www.ualberta.ca

There is good reason to welcome the movement. A country whose prosperity depends heavily on access to one foreign market has limited room to manoeuvre when that customer starts changing the terms. Additional buyers give Canadian businesses options, and those options matter even when the United States remains their largest market.

But a stronger export total does not answer every question. Canada needs to examine what it is selling, which provinces and industries are benefiting, and whether growth reflects additional production, higher prices, or both. Finding more customers for existing products is progress. Developing more Canadian products and processing capacity would deepen that progress.

The encouraging part is that there is now something concrete to build upon. China is one piece of it. Europe, Southeast Asia, and the export capabilities of eastern Canada belong in the same national effort.

What the China numbers actually show

The Canada China Business Council and the University of Alberta’s China Institute analysed Statistics Canada data for January through June 2026. Their findings show a pronounced increase in Canadian sales, concentrated in resources.

Measure	First half of 2026	Change from a year earlier
Merchandise exports to China	$21.74 billion	+30.1%
Merchandise imports from China	$44.86 billion	−5.8%
Energy exports	$7.58 billion	+81.8%
Crude petroleum exports	$5.96 billion	+116.1%
Copper ore and concentrate exports	$2.64 billion	+56.2%
Canola seed exports	$1.42 billion	+19.4%

All values are Canadian dollars. Headline totals include re-exports and use seasonally adjusted data; sector figures use unadjusted domestic exports. These series are not directly additive.

Alberta and British Columbia accounted for 92.3% of the net increase in domestic exports to China. Energy and minerals represented 58.4% of domestic exports to that market. www.ualberta.ca

Those figures should encourage ambition about what comes next. They also suggest why a national diversification strategy needs more than a rising bilateral total. An additional overseas sale can strengthen the business making it without opening a comparable opportunity for a manufacturer or processor elsewhere in Canada.

The shift extends beyond China

Statistics Canada’s broader figures establish that Canada’s export geography is changing. The United States received 75.9% of Canadian merchandise exports in 2024 and 71.7% in 2025. Exports to other countries grew 17.2% during 2025, while exports to the United States declined 5.8%. www150.statcan.gc.ca

That combination matters. A falling American share can partly reflect lost American business. Canada should aim to increase overseas sales strongly enough to support growth, rather than take comfort from a smaller percentage created by contraction.

There is encouraging evidence of additional sales. In July 2026, merchandise exports to countries other than the United States reached a record $25.6 billion, representing 33.7% of the monthly total. Shipments to the Netherlands, China, and Germany contributed most to the increase. One month cannot establish a permanent new pattern, but it adds to the evidence that overseas customers are becoming more consequential. www150.statcan.gc.ca

The composition still requires attention. Global Affairs Canada’s analysis found that gold accounted for nearly 44% of the increase in non-U.S. merchandise exports in 2025. Higher prices helped lift the totals even as export volumes to non-U.S. markets declined. A larger dollar figure can therefore overstate the breadth of the underlying commercial expansion. international.canada.ca

This is a reason to measure diversification properly. It should be judged through sustained sales, physical shipments where relevant, the range of products exported, and the number of businesses able to compete abroad. No single monthly percentage can capture all of that.

The infrastructure is beginning to pay off

The Trans Mountain expansion provides a practical explanation for part of Canada’s changing trade geography. It entered service in May 2024, nearly tripling the pipeline system’s capacity to 890,000 barrels a day and substantially expanding access to the Pacific.

By September 2025, the Canada Energy Regulator reported that Canadian crude exports to countries other than the United States had more than tripled since the expansion began operating. It also found that pipeline constraints had eased and western Canadian crude prices had improved relative to international benchmarks. cer-rec.gc.ca

That chronology deserves space in the debate. Infrastructure takes years to develop. Some of the capacity supporting today’s diversification existed before the latest deterioration in Canada-U.S. relations. Political urgency can encourage businesses to use another route; it cannot instantly create the route.

The commercial benefit also extends beyond the value of a particular shipment. A producer with a feasible alternative destination has more flexibility when negotiating with an established buyer. The usefulness of that option does not depend on abandoning the established relationship.

This is why reliable ports, railways, terminals, and connecting infrastructure belong at the centre of diversification policy. Market access is only useful when a Canadian supplier can deliver at a price and on a schedule that works for the customer.

Resource exports should not be dismissed as economically trivial. Producing and transporting them supports Canadian activity. But growth in those exports does not automatically demonstrate that Canada is expanding its processing industries or selling a wider range of finished products. Those ambitions require their own investment and evidence.

Canola exposes the unfinished work

The agricultural agreement with China illustrates how uneven market reopening can be.

Effective March 1, China reduced the combined tariff on Canadian canola seed from nearly 85% to 14.9%. It also suspended additional tariffs on canola meal, peas, lobster, and crab through the end of 2026. These were implemented changes that improved access for the affected products. www.canada.ca

However, Agriculture and Agri-Food Canada’s account of the arrangement says the additional 100% tariff on canola oil remains in place. The distinction is economically meaningful: seed, meal, and oil occupy different positions in the same production chain, and they do not face identical trading conditions. search.open.canada.ca

Restoring a market for seed helps farmers. Expanding markets for processed products can support additional activity in Canada as well. A serious strategy should pursue both, while acknowledging that the economics of processing depend on costs, capacity, demand, and access to customers.

Nor should Canada assume that improved relations make any market permanently dependable. The recent tariff history provides a concrete reminder that access can change. More business with China can contribute to diversification; the next task is to keep broadening the range of available customers.

Southeast Asia could widen the opportunity

That makes the negotiations with the Association of Southeast Asian Nations, or ASEAN, particularly relevant.

On September 22, International Trade Minister Maninder Sidhu told Reuters that negotiations on separate agreements with ASEAN and the Philippines were more than 90% complete. Ottawa was aiming to have both ready for Prime Minister Mark Carney’s planned November visit to Manila. ASEAN’s own account of the ministerial meeting said negotiations remained on track for a substantive conclusion in 2026. Reuters

The caveat is straightforward: Canada is approaching a possible negotiating breakthrough, not operating under a completed ASEAN agreement. The November objective is a target. Remaining negotiations, legal work, approval requirements, and implementation still matter before businesses can rely on new preferences.

Even so, the commercial foundation already exists. Global Affairs Canada puts two-way merchandise trade with ASEAN at $52.5 billion in 2025, up 23.7% from 2024. That includes imports and exports; it should not be presented as Canadian export revenue. It does demonstrate an established relationship that a successful agreement could strengthen. Canada.ca

The opportunity also reaches beyond energy. Canada and ASEAN’s economic cooperation agenda identifies agriculture and food, aerospace and transportation, digital industries, clean technology, natural resources, and financial services. These are areas of intended cooperation, rather than a guarantee of future contracts. international.gc.ca

For Canada, the attraction is a wider range of potential customers across Southeast Asia. Businesses should prepare for that possibility now: investigate demand, build relationships, and determine what local standards require. If an agreement is concluded, companies that have already done that work will be better positioned to use it.

The same discipline should govern government claims. Announcing an agreement is an achievement. The longer economic test is whether Canadian businesses secure profitable, repeat business under it.

Eastern Canada belongs in the expansion

Canada’s eastern export opportunities deserve comparable attention. A national strategy should develop Atlantic routes and eastern producers alongside the Pacific capacity already attracting headlines.

Seafood provides a concrete example. Fisheries and Oceans Canada reported that purchases through Spanish retailer La Sirena increased more than 80% over two years, reaching $2.77 million in 2025–26, following a Canadian promotional campaign. The same April 2026 update identified British retailer Marks & Spencer’s sourcing of Atlantic cod from Newfoundland and Labrador processor Icewater Seafoods. Canada.ca

These are modest transactions beside petroleum totals, but they reveal how diversification becomes established business. A processor develops a product, earns a buyer’s confidence, meets its requirements, and delivers consistently. Expanding those relationships can bring opportunities to communities whose prospects will never be explained by Alberta’s oil exports.

Eastern Canada should be ambitious about this. Overseas promotion should support processing, product development, and lasting customer relationships. The objective should be to sell products that retain more commercial activity in Canadian communities wherever the economics support doing so.

Transport capacity matters here too. In May, Nova Scotia and the Halifax Port Authority pursued investment discussions supporting a proposed Atlantic Hub container terminal expansion. The province said the port authority had been invited to apply for federal funding under the Trade Diversification Corridors Fund. That was an investment and application effort, not evidence that the expansion had been completed. Government of Nova Scotia News Releases

The case for developing eastern gateways is nevertheless strong. Canada needs exporters across the country to have practical overseas options. A national diversification policy should connect producers with the most commercially useful routes, rather than allow the success of one coast to stand in for the needs of the other.

More customers, more Canadian businesses

The remaining challenge becomes clearer when looking at businesses rather than shipments.

Statistics Canada counted 292 more enterprises exporting to non-U.S. destinations in 2025, an increase of 1.8%. Yet the number exporting to China declined for a sixth consecutive year. Rising sales to a country can coexist with a shrinking number of firms serving it. www150.statcan.gc.ca

The Bank of Canada’s September assessment offers a related observation: exporters looking beyond the United States have mostly been expanding relationships with existing overseas customers. Its analysis also explains why the adjustment varies by industry. Resources and agricultural products can often find alternative buyers more readily than manufactured products, whose producers face different competitive and commercial obstacles. www.bankofcanada.ca

That should guide the next phase. Smaller exporters need help with the practical costs of reaching customers: understanding regulations, financing orders, identifying distributors, and arranging dependable delivery. Producers considering additional processing need credible demand and workable economics. Ports and transport operators need investment decisions grounded in the trade they can realistically serve.

Canada has enough evidence to stop describing diversification entirely in the future tense. Overseas sales are changing, usable infrastructure is expanding the range of customers, and negotiations could improve access to further markets.

The task now is to turn those beginnings into a broader national capability. Canada should sell more across Asia, develop its Atlantic opportunities, and give more businesses a viable route into international trade. The strongest outcome would be an economy able to retain valuable American customers while making its own investment and commercial decisions with considerably more freedom.