Canada Eyes Mercosur and Global Trade Pacts to Cut U.S. Reliance

Canada’s International Trade Minister Maninder Sidhu said Thursday that both Canada and South American trade bloc Mercosur are eager to revive trade talks, as Ottawa seeks to reduce economic dependence on the United States. Sidhu confirmed discussions with Brazil’s foreign minister and noted Brazil’s President Luiz Inacio Lula da Silva had previously expressed interest in a Canada-Mercosur trade deal. Mercosur includes Brazil, Argentina, Paraguay, and Uruguay.

While Prime Minister Mark Carney is engaged in negotiations with U.S. President Donald Trump to finalize a new trade agreement by August 1, Canada is simultaneously accelerating efforts to diversify its trade portfolio. In 2024, Canada-U.S. trade exceeded C$1 trillion ($727 billion), but exports to the U.S. fell to 68% in May—down from a 75% average last year and marking a record low.

Sidhu emphasized Canada’s overexposure to the U.S. and cited Trump-era tariffs as a competitive disadvantage. He underscored Ottawa’s broader strategy to sign new free trade agreements globally, including recent deals with Ecuador and the UAE, and ongoing talks with ASEAN nations, Indonesia, and the Philippines.

Relations with China remain complex, with ongoing discussions on reducing trade barriers for key Canadian exports like canola, beef, and pet food. Sidhu also stressed the importance of mending ties with India to improve trade momentum.

On defense, Carney has pledged an additional C$9 billion to meet NATO spending goals. Sidhu highlighted efforts to expand defense procurement beyond the U.S., exploring partnerships with the EU and other allies.

Canada currently holds 15 free trade agreements covering 51 countries and 1.5 billion consumers. Sidhu confirmed more deals are in the pipeline, aligning with Canada’s long-term goal of global trade diversification.