Canada seeks to diversify trade as U.S. tariffs weigh on key industries

[The national flag of Canada against a blue sky in the Canadian Rockies]
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Canada’s economy remains overly reliant on the United States, Industry Minister Mélanie Joly warned, pledging to defend jobs in the nation’s export-driven auto sector and reduce exposure to U.S. policy shifts.

In an interview with the Canadian Broadcasting Corporation aired Sunday, Joly said Ottawa is developing a new industrial policy aimed at opening additional markets for exporters and expanding domestic procurement. The plan comes as U.S. tariffs continue to pressure Canada’s steel, aluminum, forestry, and automotive industries.

Joly accompanied Prime Minister Mark Carney to Washington for White House meetings with U.S. President Donald Trump on Oct. 7. The visit did not yield any tariff relief, but she said trade talks “are moving in the right direction.”

Trump acknowledged during the meeting that autos remain a natural source of friction between the two countries, noting that both want to sustain strong domestic car production. U.S. Commerce Department data show the U.S. exported roughly 630,000 vehicles to Canada last year while importing about 1.05 million. American factories held a significant surplus in auto parts trade with their northern neighbor.

A day later, U.S. Commerce Secretary Howard Lutnick told a Toronto audience that Washington “doesn’t want to see auto manufacturing in Canada.” Carney countered that North American automakers depend on integrated supply chains and need a regionwide trade deal to compete globally.

“The government will fight for every single job in the auto sector,” Joly said. “These are our people, and we will stand with them.”

Tensions have also surfaced within Canada over measures to protect domestic carmakers, including 100% tariffs on Chinese electric vehicles. Beijing retaliated with duties targeting Canadian agricultural exports, hurting farmers across western provinces.

China’s ambassador recently suggested that removing the EV tariffs could prompt Beijing to lift its own restrictions on Canadian food imports, CTV News reported. Manitoba Premier Wab Kinew urged Carney in a weekend letter to accept the offer, writing that while defending the auto industry is important, “the current approach has created a two-front trade war that disproportionately impacts Western Canada.”

Meanwhile, Foreign Minister Anita Anand is preparing for a diplomatic trip across Asia, including a stop in China, as Ottawa works to ease both trade and geopolitical tensions.

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