Trump's 50% tariff hits Canada, and the Carney administration accelerates the reduction of economic dependence on the US

Comparatively, US President Trump's 50% tariff on some Canadian goods came into effect this week, once again intensifying trade tension between the US and Canada, pushing the Canadian government to speed up the search for alternative markets, expand domestic trade, and promote large-scale infrastructure projects to reduce dependence on the US economy.

Currently, about 70% of Canada's exports go to the US, and the two economies are highly tied. The tariff measures previously imposed by the United States on the automobile, steel, aluminum, and timber sectors have put pressure on the Canadian manufacturing industry, leading to some job losses and a slowdown in economic growth. Canada's economy even contracted for two consecutive quarters this year, falling into a technical recession.

The latest round of 50% tariffs involves about 20 billion US dollars of Canadian exports to the US, accounting for about 5.5% of Canada's total exports to the US, covering products such as hockey sticks and cement. Canadian Prime Minister Mark Carney said that Canada will take equal tariff countermeasures to protect domestic enterprises and employment.

The market is concerned that Trump previously refused to renew the US-Mexico-Canada Agreement (USMCA) exemption arrangement, bringing the trade agreement into the annual review stage. Analysts believe that the removal of some trade protections by the US may lay the risk of further expanding tariff measures.

Faced with trade pressure, the Carney administration is promoting economic diversification. In recent years, Canada has strengthened economic and trade cooperation with China, India, Saudi Arabia and European countries, and promoted the expansion of exports to non-US markets. According to the data, Canada's exports to non-US markets increased by 11% in 2025, reaching 33% at one point, the highest level in more than 40 years.

Furthermore, Canada is strengthening its domestic economy, including reducing inter-provincial trade barriers, promoting port expansion, developing critical mineral resources, and supporting energy infrastructure construction. The government plans to invest 115 billion Canadian dollars (about 83 billion US dollars) in infrastructure funds over the next few years, and a defense budget of 82 billion Canadian dollars.