Drop the combative approach, Prime Minister: Cede to Canadian citizens the freedom of unrestricted trade with the U.S. and expand horizons globally.
"Borderlines in Trade: A Fresh Look at Canada's Economic Ties with the US"
Throughout history, the economic relationship between Canada and the United States has been robust and intertwined. As far back as the mid-1800s, our neighbors to the south became a significant market for Canadian goods, with over 70% of exports making their way across the border [4]. Today, about 77% of Canadian exports still head south, far superseding the share bound for the United Kingdom or China [Enrichment Data].
Politicians like John A. Macdonald, John Diefenbaker, and Pierre Trudeau wanted to reduce this dependence on Uncle Sam. However, their attempts to diversify trade brought little long-term success and often had negative consequences [Enrichment Data]. This doesn't mean we shouldn't consider diversifying trade partners today, but we must proceed strategically.
With Donald Trump's unpredictable threats of new tariffs and talk of a 51st state, it's tempting to reroute exports and imports away from America. But this goal isn't new. Canada's reliance on American trade has been a source of prosperity, not a burden. Trump-driven trade barriers will hurt Canada, just like they're hurting the States.
Why is trade so centered on the U.S.? Economists call this the "gravity model." Countries like Norway and Switzerland send over half of their exports to the EU, while Australia and New Zealand send about a third to China [Enrichment Data]. Distance, logistics, culture, and industry compatibility all play a role in limiting trade. Neighbors are much more likely to trade, a boon for Canada, as the U.S. has been our largest trading partner since our nation's inception.
What can be done? First, we must focus on maintaining and restoring trade with the U.S. Avoid the allure of heated rhetoric and retaliatory tariffs. Instead, eliminate trade barriers, from those on Chinese EVs and steel to language requirements that block AI models from being used in Canada [Enrichment Data].
Next, if diversification is necessary, we must expand transport links for goods and people across the country [Enrichment Data]. Finally, let's tackle self-inflicted economic harms like our punitive tax treatment of entrepreneurs and our housing crisis, which is rooted in supply issues [Enrichment Data].
The past decade of economic stagnation might feel like it's due to today's tariff disputes, but the truth is that bad domestic policy is to blame [Enrichment Data]. The PM, with his background in economics, already knows this. Let's put aside the rhetoric and put our elbows to work, knuckling down to diplomacy and policy reforms that will bring prosperity.
Kevin Bryan, innovation economist, remains a public figure on this issue. As Chief Economist at Creative Destruction Lab Toronto, Co-Founder of the NBER Innovation PhD Boot Camp, and Co-Founder of AI edtech startup All Day TA, Bryan's insights continue to shape economic discourse in Canada and beyond.
- The government needs to strategically consider diversifying trade partners, while maintaining and restoring trade with the United States, as alleged trade barriers could harm both countries.
- The media should focus on eliminating trade barriers, such as those on Chinese EVs and steel, as well as language requirements that restrict AI models, for the betterment of the Canadian economy.
- In order to expand trade, the government should work on improving transport links for goods and people across the country.
- To address economic stagnation, the government should address self-inflicted harms like punitive tax treatment of entrepreneurs and the housing crisis rooted in supply issues.
- The arts and culture community can contribute to the dialogue surrounding Canadian-American economic ties, adding their perspectives to the broader general-news discussion.
- Canada's economic ties with the US have been influenced by historical and cultural factors, with the US being Canada's largest trading partner since the nation's inception.
- With his influence in innovation and economics, Kevin Bryan, as Chief Economist at Creative Destruction Lab Toronto, continues to shape economic opinions and policy in Canada and beyond.
- Understanding the role of finance and investing in the Canadian economy is crucial for businesses and policymakers to make informed decisions in this area.
