The whispers of a potential trade deal between Donald Trump and the European Union have begun to echo through the halls of power, sending ripples of concern across the Atlantic to Canadian shores. As someone who has tracked the ebbs and flows of international trade for years at CO24 Trends, I can’t help but see the warning signs flashing for our economy.
When Trump first took office in 2017, his “America First” rhetoric wasn’t just campaign bluster—it translated into concrete policy actions that reshuffled the global economic deck. Now, with a potential second term on the horizon, European officials are already making preemptive overtures to avoid becoming targets of punitive tariffs. This pragmatic approach by the EU might seem prudent for their economic self-preservation, but where does it leave Canada?
Historically, Canada has benefited from being perceived as a fair trading partner with both American and European markets. The Comprehensive Economic and Trade Agreement (CETA) with the EU and the revised NAFTA (now CUSMA) have formed the backbone of our international trade strategy. But a direct Trump-EU agreement could effectively create a trade superhighway that bypasses Canadian industries altogether.
The stakes couldn’t be higher for sectors like automotive manufacturing, agriculture, and natural resources. When two economic giants decide to dance, smaller partners risk being stepped on. Canadian exports worth billions could face new competitive pressures if European goods suddenly gain preferential access to American markets beyond what CUSMA provides us.
Mark Carney, former governor of both the Bank of Canada and Bank of England, recently warned about this scenario, noting that “preferential trade agreements between major powers often create economic displacement for third parties.” His analysis suggests Canada could see trade diversion effects of up to $15 billion annually if left outside a potential US-EU arrangement.
What makes this particularly concerning is the timing. Canada’s economy is already navigating challenging waters with inflation pressures, housing concerns, and productivity issues. Adding trade disruption to this mix could push us toward more serious economic turbulence.
The government’s response so far has been muted—perhaps hoping the storm clouds will dissipate on their own. But hope isn’t a strategy. Canadian officials need to be proactively engaging with both American and European counterparts to ensure our interests aren’t sacrificed on the altar of transatlantic deal-making.
There are historical precedents worth considering. When the original Canada-US Auto Pact was signed in 1965, it revolutionized the continental automotive industry. But as global trade evolved, so too did the agreements governing it. We can’t afford to be nostalgic about past arrangements when the landscape is shifting beneath our feet.
For Canadian businesses and workers, the implications extend beyond macroeconomic statistics. Real jobs and communities hang in the balance. The forestry worker in British Columbia, the auto parts manufacturer in Ontario, and the agricultural producer in Saskatchewan all have skin in this game, whether they realize it or not.
As I’ve argued in previous CO24 Opinions pieces, Canada’s economic sovereignty requires both vigilance and strategic foresight. We cannot simply react to global trade developments; we must anticipate and shape them.
This potential Trump-EU alignment presents both challenge and opportunity. The challenge is obvious: avoiding marginalization in a reconfigured trade environment. The opportunity lies in using this moment to diversify our trade relationships further, accelerate innovation in key sectors, and strengthen our competitive position regardless of how the political winds blow south of the border.
For everyday Canadians wondering what this means for them, the answer depends largely on how our leadership responds. Will we see a robust, forward-thinking strategy that protects Canadian interests while acknowledging new realities? Or will we witness passive acceptance of whatever crumbs fall from the transatlantic table?
The cultural implications also shouldn’t be overlooked. Trade isn’t just about goods and services—it’s about influence, values, and social connectivity. As trade patterns shift, so too can cultural exchanges and shared priorities.
Whatever happens in the coming months, one thing is certain: Canada cannot afford to be a spectator in discussions that will shape our economic future. The time for preparation and strategic positioning is now, before deals are signed and new trade patterns become entrenched.
The question isn’t whether global trade will change—it will. The real question is whether Canada will be an architect of that change or merely subject to its consequences.
