Canada seeks new trade deal with Mercosur to diversify exports and reduce reliance on the U.S., says Trade Minister Sidhu in ongoing international outreach.
Canada Pushes Forward on Mercosur Trade Pact
Canada is accelerating efforts to finalize a free trade agreement with South America’s Mercosur bloc in a strategic move to reduce its overwhelming dependence on U.S. trade. Trade Minister Maninder Sidhu confirmed mutual interest in talks with Mercosur nations, as Ottawa looks to broaden its economic partnerships.
Why Mercosur Matters Now
Amid ongoing trade negotiations with the United States, which remains Canada’s top trading partner, federal officials are pursuing parallel agreements with other regions. The Mercosur bloc—comprising Brazil, Argentina, Paraguay, and Uruguay—represents a major opportunity. Brazil’s President Luiz Inacio Lula da Silva has also publicly shown interest in reviving stalled trade talks.
Growing Need for Diversification
Canada’s trade with the U.S. reached over $1 trillion last year, yet policymakers are increasingly concerned about overexposure. “Canadian companies are not as competitive as they used to be because of U.S. tariffs,” said Minister Sidhu. In May, exports to the U.S. dropped to 68% of total exports, the lowest on record—down from 75% last year.
Ongoing Global Trade Strategy
The Canadian government has been actively expanding trade ties across multiple regions. Recent deals include a free trade agreement with Ecuador and an investment pact with the UAE. Talks are also underway with ASEAN members and individual Indo-Pacific nations like Indonesia and the Philippines.
China, India, and Other Fronts
While relations with China remain complex, Canada is engaging in “frank discussions” on trade barriers involving canola, beef, and pet food. Meanwhile, a thaw in Canada-India relations is seen as essential to reactivating trade dialogue with the world’s fastest-growing economy.
Defense Spending and Procurement Shift
The diversification strategy extends beyond trade. Canada plans to allocate an additional C$9 billion to defense this year to meet NATO spending targets. Sidhu noted that Ottawa is working with the EU and other allies to increase defense procurement options outside the U.S. market.
A Strategic Balancing Act
While Minister Sidhu declined to detail ongoing U.S. trade negotiations, he emphasized the government’s priority: “a deal that’s best for Canadian businesses and Canadian workers.” With growing global uncertainty, Canada appears committed to securing multiple trade lanes to safeguard its economic future.
For continuous coverage and real-time updates, keep following Maple News Wire.
