During a recent address to the United Nations General Assembly, President Donald Trump faced a malfunctioning teleprompter and chose to speak off the cuff. He claimed to have been “right about everything” and touted the United States as the “hottest” country globally, with the strongest economy, military, and friendships. He also remarked that “your countries are going to hell,” leaving many in the audience perplexed.

In response to such rhetoric, Canadian leaders are increasingly focused on diversifying their trade relationships. Mark Carney, speaking to the Council of Foreign Relations, emphasized that Canada aims to reduce its reliance on U.S. policies. He stated, “The country does not want to wake up and look at — with all due respect — Truth Social or X to see what the latest change is in U.S. policy.”

Bank of Canada Governor Tiff Macklem echoed these sentiments in a speech to business leaders in Saskatchewan. He noted that the U.S. has shifted toward protectionism, with Trump’s tariffs negatively impacting global demand. Macklem pointed out that Canada has been caught in the middle and must find a new direction. He highlighted that while the U.S. accounted for 87 percent of Canadian exports in 2001, that figure dropped to around 75 percent by 2010 and remains similar today.

“We need to learn from the past,” Macklem said. “The recession in 2009 highlighted how vulnerable we are to a drop in U.S. demand and everyone talked about diversification then too. But not much happened. This time we need to follow through.” He acknowledged that while the U.S. will always be a vital trading partner, Canada must seek new markets for its products.

Exporters are feeling the pressure, with the Export Development Corporation’s trade confidence index falling below its historical average. This decline is partly due to a 10 percent year-on-year drop in exports to the U.S. in July, as tariffs impact sales expectations. A recent survey indicated that 71 percent of exporters plan to expand into new markets over the next two years, particularly in countries where Canada has free trade agreements.

A significant step in this direction was Indonesia’s President Prabowo Subianto’s visit to Ottawa, where he met with Carney to sign a trade agreement. Indonesia’s economy is growing at about five percent annually and is projected to become the fifth-largest economy in the world by 2030. However, Canada’s exports to Indonesia are currently equivalent to what it sends to China in just one month.

Recent history shows that free trade agreements can positively influence trade flows. For instance, since the Trans-Pacific Partnership was established in 2018, bilateral trade with Vietnam surged from $6.5 billion to $15.7 billion annually. Nevertheless, to significantly reduce its trade dependency on the U.S., Canada will need to increase its trade with the European Union and China, which presents its own challenges.

Macklem noted that trade is being used as a tool for state-directed growth by China, giving its companies an edge unless Canada adopts similar industrial policies. Carney expressed a willingness to engage with China, stating, “They happen to have built real competitive advantage in a number of these areas… there’s an opportunity to engage.”

During the UN meeting in New York, Carney also met with China’s premier, further indicating Canada’s intent to explore new trade avenues.