Canada’s international trade minister says there is mutual interest in reviving trade negotiations with the South American Mercosur bloc, as the federal government looks to expand its trade partnerships beyond the United States.
While Prime Minister Mark Carney and his team continue negotiations with U.S. President Donald Trump in hopes of securing a trade agreement by August 1—potentially reducing tariffs for Canadian exports—Ottawa is also actively working to lessen its reliance on the U.S., with a growing emphasis on global diversification through new trade deals.
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“There’s clear interest on both sides,” said Trade Minister Maninder Sidhu in an interview with Reuters, referring to talks with Brazil’s foreign minister about restarting discussions with Mercosur.
Brazilian President Luiz Inacio Lula da Silva had expressed a willingness earlier this year to advance negotiations for a potential trade agreement between Canada and Mercosur, which includes Brazil, Argentina, Paraguay, and Uruguay. The two sides have previously held talks but never finalized a deal.
Beyond South America, Sidhu noted that Canada is also continuing efforts to engage with China on resolving longstanding trade issues, including tariffs on Canadian exports like canola, beef, pet food, and other goods.
“With China, there are both opportunities and challenges,” he said, emphasizing that ongoing “frank conversations” are key to moving forward.
Improving ties with India is also on Ottawa’s agenda, with Sidhu calling a warming of relations essential to supporting trade.
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Canada currently has 15 free-trade agreements in place with 51 countries, granting access to 1.5 billion consumers worldwide. Sidhu said the government is actively pursuing more deals, although he did not specify targets.
In his first two months as trade minister, Sidhu signed a free trade agreement with Ecuador and an investment protection agreement with the United Arab Emirates. He also said Canada is engaged in negotiations with ASEAN nations as a group, as well as with individual countries in the Indo-Pacific such as Indonesia and the Philippines.
Reducing U.S. Dependence
Sidhu highlighted the risks of over-dependence on the U.S. market, saying Canadian firms have become less competitive, particularly in the face of tariffs imposed under the Trump administration.
“My job is to be out there opening doors,” he said, noting that diversification efforts also extend beyond trade to include defense procurement.
Carney has committed to increasing Canada’s defense spending by C$9 billion this year to meet NATO’s goal of spending 2% of GDP. Sidhu said the government is actively working with the European Union and other allies to open up new defense procurement opportunities for Canadian firms.
Canadian exports to the U.S. accounted for just 68% of total exports in May, down from a 75% monthly average in 2024. That figure marks the lowest U.S. share of Canadian exports on record, as companies pivot toward broader international markets.
Sidhu did not give details on what a Canada-U.S. trade agreement might entail but emphasized that the government’s priority is securing a deal that “works best for Canadian businesses and workers.”
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