In a lonely place

Being the United States' closest ally and neighbor used to be Canada's biggest geopolitical advantages. The two countries share the world's longest international border. The US is Canada's single most important trading partner. In 2024, the US was the destination for 75.9 percent of Canada's exports, and the bilateral trade volume was valued at over $1 trillion. The US is also the largest investor in Canada, accounting for 46 percent of total foreign direct investment.

Unlike the criticism that is a "free-rider" voiced by the US side, Canada is a longtime supporter of the US' international strategy, even sometimes at the cost of its own interests. In 2018, Canada exported C$31.1 billion ($21.61 billion) to its second-largest trading partner, China. The Justin Trudeau administration was planning to further strengthen the bilateral economic partnership and promote the China-Canada Free Trade Agreement talks. However, the first Donald Trump administration put Canada in a very difficult situation by making an extradition request for the illegal detention of Huawei Chief Financial Officer Meng Wanzhou in Vancouver. As a consequence, the prospect of a new "golden era" in Canada-China relations suddenly evaporated, and the bilateral relationship has deteriorated significantly since then.

Additionally, as a partner geographically far away from Asia, and with no territorial disputes with any countries in this region, Canada invested C$2.3 billion into its "Indo-Pacific" strategy, describing China as "an increasingly disruptive global power", in order to support the US's containment of China. After the Ukraine crisis broke out in 2022, German Chancellor Olaf Scholz went to Canada, seeking an alternative to Russia's supply of liquefied natural gas. Instead of seizing the moment for Canadian LNG exports to Europe, the Trudeau administration introduced the "no more pipelines" law stopping the LNG infrastructure necessary to deliver gas across the Atlantic. In fact, 39.4 percent of Canadian natural gas is exported to the US for its energy security.

Such decisions not only undermined Canada's economic and diplomatic opportunity of cooperation with China, Europe and other economies, but also put the country in a risky position, as the decisions made in Washington demonstrated that the US and Canadian interests do not always overlap.

At first, Canadian commentators considered "America First" to be a negotiating sledgehammer to push Canada to invest more in border security and its military budget, and make more concessions on bilateral trade as it functioned in Trump's first term. Some even tried to shift the blame to China by arguing that the US was threatening to impose huge tariffs on allies in part to pave the way for tougher policies on China. But instead of exempting Canadian goods from tariffs as listed in the US-Mexico-Canada Agreement, a trade deal Trump ratified himself, the looming tariff is also used as a threat on Canada as the 51st state of the US.

When Trump's onslaught has intensified, Canada has found itself in a lonely place.

Continuously wooing the US will not help Canada get out of trouble this time. US federal statistics show that only 0.2 percent of the 21,889 pounds of fentanyl and only 1.5 percent of the 16 million illegal migrants seized at the US borders in 2024 were from Canada. It means even if the Canadian government tries to make the figures zero, it will be of limited help to solve the US' domestic problems.

Due to the asymmetrical relationship between Canada and the US, Ottawa's dollar-for-dollar retaliation will hurt itself more than the US. According to the Brookings Institution, the combined retaliation tariff from both Canada and Mexico will only impact the US' GDP by 0.05 percent, the unemployment rate by 0.14 percent, and exports by 3 percent. In contrast, the Canadian Chamber of Commerce estimates that a 25 percent tariff from the US on Canadian goods could cause a 2.6 percent decline in Canada's GDP. This serious destructiveness will further become a bargaining chip for Trump to make exorbitant demands.

Since 2018, the Trudeau government has chosen to sour Canada's relations with the two largest developing countries — China and India — and to weaken the economic ties with Europe, while actively siding with the US. Now its GDP per capita gap with the US has doubled from $16,662 to $32,767. No country is standing up for Canada as it is being bullied by the US. Canada's grief tells other US allies and partners a lesson — the benefits of siding with the US might seem to be considerable, but they will not come without a price, particularly when the US decides to flex its muscles.

For Canada, a more significant concern than the devastating impact of a US-Canada tariff war on certain industries is the potential loss of the US as the maintainer of regional and international trade-based order. This shift makes it imperative for Canada to rethink and redefine its role both regionally and globally.

As a member of the G7 and a middle power, Canada must systematically assess its core interests, clarify its priorities and develop pragmatic strategies for these goals. To ease the Trump administration's reinforced pressure, the Canadian government needs to seek broader international cooperation, focus on substantive issues, and extend relationship networks with more strategic and multidimensional partners.

The European Union is Canada's important economic ally. Since the Comprehensive Economic and Trade Agreement took effect in 2017, the EU has become Canada's second-largest export destination. The EU has high demand for Canada's key minerals and energy. There is a lot of potential for bilateral cooperation in minerals, clean energy, artificial intelligence, new technologies, trade rules and supply chain stability.

China is the world's second-largest economy. Despite the fact that China-Canada relations have suffered setbacks, Canada's high-quality agricultural products, energy resources and advanced technologies still have broad potential for cooperation with China. Against the background of rebuilding global supply chains, Canada could establish mutually beneficial cooperation with China in the fields of the green economy, digital trade, biomedicine, education, tourism and infrastructure construction, through more pragmatic policies.

In addition, Canada could also expand cooperation with emerging economies in the Asia-Pacific region, Latin America, Africa and other regions to enhance strategic autonomy in a multipolar global landscape. Only by establishing a diversified international cooperation network can Canada effectively safeguard its own interests, reduce its vulnerability in international trade and diplomacy, and secure a more favorable role in the international order transition.

The author is a research fellow of the Foreign Policy Division at the Institute of World Economics and Politics at the Chinese Academy of Social Sciences. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.