Canada Looks to Mercosur as U.S. Tariffs Trigger Trade Rethink

Canada is moving to lower its dependence on the United States after new tariffs upended years of stable trade.

Official figures show Canada traded over C$1 trillion with the U.S. last year, but recent U.S. taxes on Canadian steel and aluminum have cut into profits and threatened jobs.

Now, Canada’s government is speaking directly with Mercosur, a trade bloc that includes Brazil, Argentina, Paraguay, and Uruguay. Talks aim to create a deal allowing Canadian exports—like machinery, cars, and farm products—to enter South America more cheaply.

These products now face tariffs up to 35 percent. Canada has long relied on the U.S. for nearly 75 percent of its exports, making it vulnerable to rapid policy changes in Washington.

This year, official export statistics revealed the U.S. market share dropped to 68 percent, as Canadian businesses faced higher costs and slower sales.

To reduce this risk, Canadian leaders have signed new deals with Ecuador and the United Arab Emirates, expanded talks with Southeast Asian nations, and reopened discussions with China and India.

They hope these steps, along with talks with Mercosur, will help Canadian businesses find new customers and keep jobs at home. Transport data from the government shows most trade still moves through U.S. infrastructure.

Shifting trade overseas will mean investing more in ports and shipping, and officials admit this is a long process. Canada’s push to broaden its trading partners is a direct response to economic realities.

These include lost jobs in factories, rising material costs, and the risks of overreliance on a single market. Each decision, as confirmed by trade ministry data and government speeches, puts the focus on protecting Canadian workers and helping companies bounce back from current shocks.