Canadian Minister of International Trade, Maninder Sidhu, said in an interview with Reuters that there is mutual interest in advancing negotiations between Canada and Mercosur — the South American trade bloc comprising Brazil, Argentina, Paraguay, and Uruguay. “I had conversations with the foreign minister of Brazil, and there is appetite to carry out conversations around Mercosur,” Sidhu stated.
This move comes as Prime Minister Mark Carney’s government is working to finalize a new trade agreement with U.S. President Donald Trump by August 1, aimed at reducing tariffs on Canadian goods. However, recognizing the risks of over-reliance on a single market — especially one with increasingly protectionist tendencies — Ottawa is looking to expand trade links across the globe.
Last year, Canada’s trade with the U.S. totaled over C$1 trillion, but in May 2025, exports to the U.S. fell to just 68% of Canada’s total exports, down from a monthly average of 75% the previous year — the lowest share on record. Sidhu said Canadian companies are "over-exposed" to the U.S. market and that Trump's tariff policies have made Canadian businesses less competitive.
In response, the government is pursuing free trade deals beyond North America. In his first two months in office, Sidhu signed a free trade agreement with Ecuador and an investment promotion pact with the United Arab Emirates. He also confirmed active negotiations with ASEAN countries, as well as with individual Indo-Pacific nations such as Indonesia and the Philippines.
Talks with China are also ongoing, despite political tensions. Canada is seeking to address trade barriers related to exports of canola, beef, pet food, and other goods. Sidhu acknowledged the challenges but emphasized the importance of "frank discussions" to move forward.
Furthermore, Canada views the recent easing of diplomatic tensions with India as an important opportunity to restore trade momentum.
On the defense front, Ottawa is also looking to reduce its dependency on U.S. military suppliers. Carney has pledged to raise defense spending by an additional C$9 billion this year to meet NATO’s 2% GDP target. “We are working with the European Union and other partners around the world to help unlock some of those procurement opportunities in defense for our Canadian companies,” said Sidhu.
Although he declined to give specific details about a potential Canada–U.S. trade deal, Sidhu emphasized that any agreement must support the interests of Canadian businesses and workers. “My job is to be out there opening doors,” he said.
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