Canada looks to Asia to reduce reliance on US market amid tariff tensions
Canada is facing new US tariffs and the end of the USMCA, prompting a shift toward Asian markets. However, Canadian exports to Asia remain small, and both sides lack mutual understanding. The country aims to diversify trade partners, with Japan and South Korea as immediate priorities.
The U.S. declined to renew the USMCA in July, then levied 50% tariffs on Canadian goods in August. Ottawa responded by scheduling retaliatory duties on $20 billion of American products, effective September 8.
Energy flows illustrate the shift. Crude exports to non-U.S. markets hit $10 billion in 2025, averaging 430,000 barrels daily—up from virtually zero before 2024. Alberta's oil sales to China and South Korea jumped 122% and 227% in early 2026, aided by Asian-backed LNG projects.
A successful pivot could shield Canadian businesses from abrupt U.S. policy shifts, but the benefits may accrue unevenly. Energy and commodity exporters might gain first, while smaller manufacturers and agrifood producers could face steep learning curves in unfamiliar Asian markets. Canadian consumers may experience price volatility as tariff costs and rerouted supply chains ripple through domestic shelves. Ultimately, diversification could foster long-term economic resilience, though immediate gains remain uncertain.