Europe Is Becoming Canada’s Second Economic Pillar

September 15, 2026

By Yiannis Damellos

For most of its modern history, Canada has lived economically in the shadow of the United States. Geography made it mandatory: the world's largest economy sits immediately south of Canada, connected by roads, railways, pipelines, electricity grids and integrated supply chains. But under Mark Carney, Ottawa is attempting something much more ambitious than negotiating better terms with Trump's hegemonic apparatus. It is beginning to redesign Canada’s economic geography. Europe and Great Britain are emerging as the second pillar of that strategy—not as a replacement for the United States, but as a safety net, to build the foundation of a more diversified and strategically autonomous Canada.  

The scale of the existing imbalance explains the urgency. In 2025, roughly 72% of Canadian exports went to the United States, while the European Union accounted for about C$178.6 billion in two-way trade in goods and services. The EU is already Canada's second-largest trading partner and second-largest source of foreign direct investment after the United States. Yet the European relationship remains considerably smaller than Canada's American one. Carney's pragmatic objective is therefore not to transfer Canada's dependence from Washington to Brussels. It is to ensure that no single market has the power to determine Canada's economic future. He was voted in to do exactly that. Now, he is delivering.

The foundation already exists. The Canada-European Union Comprehensive Economic and Trade Agreement, or CETA, entered provisional force in 2017 and has substantially increased bilateral commerce. Canadian government figures show that goods and services trade with the EU reached C$178.6 billion in 2025, while Canadian companies had roughly C$297 billion invested in the EU in 2024. Carney is now pushing Europe to complete ratification of CETA and to use the agreement more aggressively. The message is straightforward: Canada already has access to a market of 27 countries; the problem is that it has never fully exploited it.

But the Carney strategy goes far beyond conventional trade. Ottawa and Brussels are building a relationship involving energy, critical minerals, artificial intelligence, cybersecurity, digital infrastructure, research, technology and investment. Canada has also become the first non-European participant in the EU's Security Action for Europe, or SAFE, opening opportunities for Canadian defence companies in European procurement. The first Canadian procurement under the initiative is already underway: Montréal-based Marconi Technologies is producing tactical radios for Poland, using a network of Canadian suppliers.

Defence may ultimately become one of the most important economic links between Canada and Europe. Canada is expanding its own defence-industrial capacity while integrating Canadian companies into European supply chains. Cooperation with Ukraine is another example: Ottawa is developing joint production of drones, counter-drone systems and priority munitions, combining Ukrainian battlefield experience with Canadian manufacturing, software and artificial intelligence. The objective is no longer simply for Canada to purchase defence equipment from allies. It is to build Canadian production capacity that can sell into allied markets.

Critical minerals provide another piece of the puzzle. Europe needs reliable supplies of minerals essential to batteries, electronics, energy systems and advanced manufacturing, while Canada possesses substantial resources and is attempting to develop domestic processing and supply chains. Canada has established critical-mineral partnerships with European countries including France, Germany, Italy, Finland and Norway. The emerging model is therefore not simply "Canada sells minerals to Europe." It is an attempt to connect Canadian resources, European capital, technology and industrial capacity into resilient supply chains that are less vulnerable to geopolitical pressure.

Energy makes the relationship even more consequential. Canada possesses enormous conventional and clean-energy resources, while Europe has spent years trying to make its energy supply more resilient. Carney is simultaneously pursuing stronger energy relationships with European countries and investing in Canadian infrastructure capable of moving resources to markets beyond the United States. The same logic applies to aerospace, quantum technology, artificial intelligence, satellites and advanced computing. In September, Ottawa announced plans to deepen cooperation with France in precisely these sectors. What is emerging is therefore not an old-fashioned commodity relationship but a network of strategic industries.

There is also a social dimension. Ottawa is discussing a deeper relationship with Europe that could eventually expand opportunities for Canadians to live, work and study in European countries. That matters because economic integration is not only about goods crossing borders. It is also about students, researchers, engineers, entrepreneurs, investors and skilled workers moving between economies. A deeper Canada-Europe relationship could therefore gradually create something resembling a transatlantic economic community without Canada becoming an EU member. The proposal under discussion remains exploratory, but the direction is unmistakable.

Yet the word "independence" requires some caution. Canada cannot simply replace the American market with Europe. Geography remains geography, and American supply chains remain deeply embedded in Canadian manufacturing, agriculture, energy and commerce. Diversification also costs money: European markets require different standards, longer transportation routes and new infrastructure. More importantly, the United States will remain Canada's largest economic partner for the foreseeable future. Carney himself has emphasized that Canada will remain America's neighbour and an important U.S. partner. The strategy is therefore not economic divorce. It is reducing the consequences of dependence.

That explains why the domestic part of the strategy may be more important than any individual European agreement. On Sept. 15, Carney announced a permanent Productivity Mega Deduction designed to make large investments in Canadian mining, energy, transportation, manufacturing and technology more attractive. Ottawa is also targeting hundreds of billions of dollars in new investment and building a defence-industrial strategy around aerospace, shipbuilding, AI, cyber, quantum technology, robotics and autonomous systems. The logic is circular: Canada needs diversified markets to support domestic production, but it also needs domestic production before diversified markets become economically meaningful.

The real significance of the Carney strategy, therefore, may not be that Canada is "turning toward Europe." It is that Canada is attempting to change from a country whose economic security depends overwhelmingly on one enormous neighbour into a country with multiple economic and strategic pillars: the United States, Europe, the Indo-Pacific, even China, and a stronger domestic industrial base. Europe is particularly important because it can provide markets, investment, technology, defence cooperation and political alignment at the same time. If Canada succeeds, the result will not be an anti-American Canada. It will be a Canada that can deal with America, Europe and the rest of the world from a position of greater choice and leverage. That is the essence of strategic autonomy: not isolation, but having somewhere else to go when your neighbours become Infected By "Trump".

Some final words

Some of you will say Carney's infatuation with the Old Continent cannot guarantee a turnaround, because the US is too big to ignore. But if we stay idle and servile to the Hegemon, we will never know if Carney's plan will work out. Eventually, we will be swallowed by the neighbour and lose our independence. My birthplace, Greece, has lost exactly that to the US. It entertained some delusions of grandeur for some time, only to realize that being located in the rear end of the world requires powerful masters to keep you afloat when the shite hits the fan. But Greece is a small peripheral power, an American outpost. Canada is a huge middle power. It still has its dignity, its geography, a fine and proud people, a multicultural heritage and a health care system to be proud of, and majestic lands full of natural beauty and mineral wealth. That is our leverage. And it's not for sale.