Canada calling: time for stronger friendship with the EU

The actions of the US since the start of the current administration, be it calling Canada ‘’the 51^st US state’’ or the on-and-off tariff threats behind the pretense of securing the border from illegal migration and fentanyl, have left Canada feeling betrayed. However, this treatment is not unique to Canada. Similar measures, with variations, have been directed towards Mexico, India, China, and the European Union (EU).

The US President has repeatedly stated that the EU has taken advantage of the US, claiming it does not buy enough American products, especially in the automotive and agricultural sectors. In addition to imposing tariffs, the US administration is also pressuring the EU to increase its share of contribution to NATO. This pressure tactic underscores the administration’s belief that all members must contribute their respective share, as the US is no longer willing to shoulder as significant of a financial and human resource burden (currently 3.7% of GDP and 100,000 battle-ready troops stationed in Europe) as it has in the past.

Is it just about tariffs or a larger shift in values? A changing world order

These recent developments raise a broader geopolitical question: Were the Trump tariffs isolated measures to bolster the US domestic supply chain and attract investments back to the country, or do they signify a shift in the United States' role in the global order?

Decisions such as withdrawal from climate agreements, funding cuts to international aid, threats of withdrawal from NATO, and delays in aid for Ukraine signal an ‘America first’ approach, marking an end to the liberal values-driven leadership showcased in the past by the US. The new US approach, which contrasts starkly with the country’s previous domestic and foreign policy, is leading the world to rethink what the world order would look like without the old role of the US within it.

Looking at the situation from the perspective of the current US administration, it is understandable that they may decide to look inwards and take measures they believe would strengthen the global competitiveness or geopolitical position of the US. However, this shift leaves a leadership vacuum and forces other countries to take real stock of their dependencies on the US and its future reliability as a partner. Countries have already started to take measures to address this issue. For example, the Readiness 2030 package, put forward by the European Commission in March 2025, proposes an increase in Europe’s defence spending by up to 1.5% of GDP until 2028.

Canada and the EU: the case for a stronger sustainable partnership

While the US remains Canada’s largest trading partner, it is time for Canada to diversify its trade relations with other regions and find innovative ways to strengthen them. For example, the EU is Canada’s second-largest trading partner after the US, with 98% of all tariff lines abolished between Canada and EU countries. The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) would offer Canadian businesses preferential access to the EU and excellent opportunities for growth in the European Union. However, the agreement is still pending ratification from 10 member states (Belgium, Bulgaria, Cyprus, France, Greece, Hungary, Ireland, Italy, Poland, and Slovenia), a requirement for it to come into full effect. The time is ripe to revisit this agreement and initiate dialogues with the non-signatory member states.

From a value proposition lens, Canada’s strengths in energy supply (including nuclear), critical minerals (copper, nickel, cobalt, lithium, and rare earth elements), and human capital (represented by a highly educated and skilled workforce) makes it well positioned to reinforce its relationship with the EU. Canada has the world’s largest potash reserves (1.1 billion tonnes) and third-largest oil reserves (168 billion barrels), behind Venezuela and Saudi Arabia. It is also the second-largest producer of uranium, accounting for roughly 13% of total global output, and has the world's largest deposits of high-grade uranium, which is vital for nuclear energy production.

Moreover, Canada ranks 4^th in AI competitiveness and has a highly skilled workforce, with over 67% of 25- to 64-year-olds holding a post-secondary diploma or degree and with over 2.8 million STEM graduates fuelling the country’s economic growth. The country has also been a leader in attracting and retaining highly skilled workers, with the highest proportion of highly skilled immigrants among OECD members.

From the EU’s perspective, in 2024, Canada was the EU's 12^th-largest destination for goods exports and accounted for almost 1.4% of the EU's total external trade in goods. Top traded goods included machinery, chemical and pharmaceutical products, and mineral products. However, the biggest value proposition for the EU is its strong and highly integrated single market, with its free movement of goods, services, capital, and people. The single market comprises 24 million companies and over 512 million customers, making it the largest of its kind in the world. Additionally, more than one-fifth of the world’s clean technologies are developed in the EU.

Initiatives have been undertaken by Canada to strengthen transatlantic ties with the EU and its member states since the start of the tariff threats by the US. Former Canadian Prime Minister Justin Trudeau and other Canadian officials held multiple meetings with their counterparts from EU member states, such as France and Germany, along with the leaders of the European Council and the European Commission, signalling Canada’s interest in strengthening this relationship. Current Canadian Prime Minister Mark Carney has continued this effort.

The recent diplomatic shift on the part of the US administration also creates an opportunity for entities like Canada and the EU to test new models of collaboration. Canada’s joining the EU remains a distant notion, but could the principles of ‘an integrated market with free movement of goods and services’ be applied to the EU-Canada relationship in practice without formal accession to the EU? Countries like the UK, Switzerland, and Norway have strong ties with the EU despite the absence of formal membership. Therefore, it is worth conducting a serious analysis into possible strategies for operational cooperation on critical values for future prosperity and growth that go beyond the terms proposed in CETA.

Canada has a long history of leveraging immigration and integration systems to sustain demographic and economic growth. Creating opportunities for EU citizens to freely work and live in Canada could address labour shortages in certain communities and sectors. Similarly, European countries that are facing labour shortages in critical sectors could benefit from free movement of the Canadian workforce within the EU.

An example of strengthened Canada-EU collaboration that is currently underway in the research and knowledge sharing domain can be found in Horizon Europe, the EU's flagship research and innovation programme and one of the world’s largest research initiatives, with a budget of over €93.5 billion. The programme’s Pillar II is now  open to Canadian researchers and organisations through an association agreement, with a specific focus on global challenges and industrial competitiveness. Association to Pillar II of Horizon Europe in 2024 means that Canadian entities can now join and lead research consortia, receive direct funding, and collaborate with European partners on equal footing with EU members.

From a market perspective, Canada is an important source of minerals such as lithium, cobalt, nickel, graphite, copper, and rare earth elements (REEs). Although these substances are essential for meeting energy transition and defence needs, the EU is currently dependent on imports from jurisdictions that are subject to varying degrees of geopolitical volatility. Canada, with its access to multiple critical minerals that are considered dual-use, could become a reliable trading partner for the EU and support Europe’s energy security needs.

Furthermore, the Canadian province of Saskatchewan is home to the largest deposit of high-grade uranium on Earth, and with proper regulatory support from the Canadian Nuclear Safety Commission, it has the potential to become a reliable fuel supplier for European nuclear power generation. In addition to the energy sector, there is also room for increased Canada-EU collaboration in the life sciences sector. For instance, the field of medical isotopes could benefit from such collaboration, given Canada's robust isotope ecosystem that includes nuclear and research reactors.

The way forward

The new EU-Canada Strategic Partnership of the Future, announced in June 2025 by Canadian Prime Minister Mark Carney, European Union Council President António Costa, and European Commission President Ursula von der Leyen, marks a positive step towards strengthening these transatlantic ties. However, to translate uncertainties into opportunities, there is an urgent need for concrete action plans aligned with national priorities and global aspirations. These plans would require strategic investments, dedicated project offices for different work streams, and innovative approaches for execution. Such approaches may include joint trade and investment missions, fast-track approval mechanisms for scaling of strategic investment projects, streamlining mobility and recognition of skills, and partnering on establishing joint governance on priority areas such as climate change or AI. Most importantly, it is critical to articulate, through joint projects and exchanges, the shared values that are foundational to a strengthened Canada-EU relationship.

Tags: EU, Europe, Canada, Geopolitics