CNN journalist Fareed Zakaria wrote in the Washington Post last week about Trump’s war on American colleges and research universities, describing it as the American version of the Cultural Revolution. It rings true. If so, we should expect extended government turmoil and chaos in international relations. And Canadian business leaders and government officials will have to embark on a new economic strategy that will allow us to exercise strategic patience with Americans while rapidly diversifying our revenues.
Trump’s trade tariff chaos has left Canada’s $46-billion electric vehicle strategy in tatters as global automakers freeze construction and capital deployment indefinitely. The Ontario government is desperate to put the plans back in place. Unfortunately, the economic model that has defined Canada for generations – offering cheap land, energy, and labour to foreign companies to access the American market – has collapsed overnight.
Having navigated trade negotiations at the highest levels of government, I've seen what goes on behind the curtain of trade relations between countries. The uncomfortable truth is that America's political transformation isn't temporary. For reference, China’s chaos lasted ten years—18 if you count its attempt to reindustrialize through the Great Leap Forward from 1958. Whether Trump is at the helm or not, America’s fundamental, inward shift led by the MAGA movement thus demands an equally fundamental response from Canadians.
Our negotiation leverage remains significant—Trump's repeated pauses prove this—but Canada-US interdependence is no longer a shield. It's time for Canadian companies to adopt a dual strategy: fighting to maintain critical economic ties while aggressively diversifying away from American dependence.
This moment demands more than platitudes about innovation. It requires precise, strategic decisions about which industries Canada must develop and protect. While other nations execute focused industrial policies – France 2030, Saudi Vision 2030, Made in China 2025 – Canada's approach remains dangerously unfocused, trying to please a highly disparate set of stakeholders, many of whom are multinationals and are not even Canadian.
Even our so-called productivity gap could be attributed to our economy being so closely linked to lower American growth vis-a-vis Asia and Africa, which have both been growing at 4-9% for the last decade. When your biggest, most consequential customer (America), responsible for 77% of your export revenue, is growing at sub-3%, your revenue–or in this case, GDP–will not grow much higher than that. It is basic math.
The path forward requires dismantling our branch-plant mentality and redirecting our lopsided financial system from mortgage lending toward domestic business investments. Companies that recognize this shift early and advocate effectively for supportive government policies will emerge as winners.
This transformation demands Canadian leadership to make strategic bets on specific Canadian industries. Having sat through countless internal government meetings in Ottawa where senior department officials contort themselves to avoid "picking winners," I recognize the institutional resistance.
Yet Trump's economic ultimatums have now forced our hand. Canada must make deliberate choices about which sectors to champion based on clear criteria: industries where we possess global competitive advantages, sectors with robust intellectual property potential, markets with willing international partners, and supply chains we can reasonably control.
Canadian politicians and public servants face a stark choice: continue betting on unreliable American access for the foreseeable future or foster a framework for resilient, globally competitive enterprises in Canada. Clinging to an outdated economic strategy risks a long, drawn-out path to economic mediocrity and being absorbed by the United States.
