US-Canada trade war reaches new heights: Why are middle powers seeking to avoid dependence on the US?

Opinion

Long-standing trade tensions between the United States and Canada have reached new heights in recent weeks. After Canada withdrew its delegation from Washington in late August after more than a year of talks, the United States imposed tariffs of up to 50 percent on about $20 billion worth of Canadian goods. Canada responded by imposing “dollar-for-dollar” tariffs on the same value of U.S. goods, effective September 8.

Trump’s controversial comments and economic reality

Amidst this tension, President Donald Trump said on September 5 that the United States could save $90 billion a year by completely cutting off trade with Canada. A few days earlier, he had also said that the United States could save $60 to $90 billion a year by cutting off trade with Canada, while also raising the issue of similar cuts with Mexico and the European Union.

But this claim has been widely questioned. Journalist Daniel Dale points out that the US-Canada trade deficit in goods and services last year was actually $27 billion, which is nowhere near the figure Trump claims. Critics argue that the trade deficit does not directly mean “lost money,” but rather that Canada supplies the US with essential goods such as energy, vehicles, and machinery, while the US exports hundreds of billions of dollars in goods to Canada — total two-way trade between the two countries exceeded $870 billion last year.

Amid the controversy, Trump recently announced the suspension of all trade talks with Canada, blaming a Canadian advertising campaign that used an old anti-tariff quote from former President Ronald Reagan. Canadian Prime Minister Mark Carney has vowed to push forward with trade relations despite the threat.

Why are middle power countries trying to avoid US-dependence?

Due to such sudden and unpredictable trade policies, many middle power countries in the world, including Canada, are now looking to reduce their exclusive commercial dependence on the United States and seek alternative and stable markets. There are several main reasons behind this:

1. Uncertain trade and policy instability: The Trump administration’s tariff policy is changing frequently and decisions are often made for political or personal reasons (such as an advertisement), creating a risky environment for long-term investments and planning.

2. Fear of economic coercion: According to analysts, in the face of reckless economic coercion by the United States, middle powers are seeking a stronger collective response through a new geopolitical alliance. Canadian Prime Minister Mark Carney, in a widely discussed speech at the 2026 Davos World Economic Forum and during a visit to Australia, stressed the need for collective leadership by middle powers in confronting rogue superpowers in an unstable world.

3. Finding alternative markets — the resurgence of the CANZUK concept: The old proposal to form a closer trading alliance between Canada, Australia, New Zealand and the United Kingdom (CANZUK) is gaining new momentum. The Mail on Sunday reports that the Canadian government is giving renewed attention to the CANZUK partnership with Australia, New Zealand and the United Kingdom after trade talks with the United States abruptly collapsed. In fact, Carney had mentioned developing closer trading relationships with Australia, New Zealand and the United Kingdom in response to US tariff pressure during the 2025 Liberal Party leadership election.

Political support for the idea is also growing. In March 2026, Canadian Conservative Party leader Pierre Pouliot visited London and called for a “modern CANZUK” — one that would open up the four economies more, allow for mutual recognition of professional qualifications, facilitate the movement of skilled workers, and deepen capital markets. In the same month, UK Conservative leader Kim Badenoch publicly supported a CANZUK economic alliance, while Liberal Democrat leader Sir Ed Davey argued for closer trade, intelligence sharing, and defense cooperation between the four countries.

4. Economic rationale: According to analysts arguing for the CANZUK alliance, the four countries could together create an integrated market of more than 136 million people, with a combined nominal GDP of over $8.3 trillion, by reducing trade barriers, mutual recognition of professional qualifications, and harmonizing regulatory frameworks. In addition, the four countries already have an internal trade volume of about $3.5 trillion, reflecting synergies in energy, agriculture, and technology.

5. Other market diversification initiatives: Canada is also looking for alternative markets in other ways, not just CANZUK. In January 2026, Canada and China reached a preliminary agreement to reduce tariffs on certain Canadian agricultural products, such as canola oil. In addition, the European Union has reportedly invited Canada to become the first “associate member” of the bloc.

Overall picture

According to analysts, the unpredictable and often unilateral trade policy of the United States has confronted the world’s middle powers with a reality — excessive economic dependence on a single great power can become a political risk. It is from this realization that like-minded countries such as Canada, Australia, New Zealand and the United Kingdom, with the same legal and political framework, are trying to build deeper economic and strategic integration among themselves, so that in the future the policy whims of a single superpower cannot put their economies at risk. However, CANZUK has not yet taken institutional form, and whether it will be implemented or not depends on the political will of the four governments and the diplomatic progress in the near future.

–Shariful Hasan
Online Activist