The Number Canada Hasn't Seen Since Before Free Trade

In July, a record $25.6 billion of Canadian goods went to countries other than the United States — 33.7 per cent of everything the country sold abroad. The last time the American share was this low, the Free Trade Agreement had not yet been signed.

In 1988, roughly 70 per cent of Canadian goods exports went to the United States. The Canada-US Free Trade Agreement had been negotiated but had not yet taken effect.

By 2002, after that agreement and then NAFTA, the figure was just under 90 per cent. Nine dollars in every ten.

In July 2026 it was 66.3 per cent.

Canada has spent four decades building the most integrated bilateral trading relationship in the world, and it has now, on this single measure, unwound back past where it started.

What the July numbers say

Statistics Canada reported that exports to countries other than the United States reached $25.6 billion in July — a record, up 7.4 per cent on the month, and the third consecutive monthly increase.

Non-American markets took 33.7 per cent of total goods exports. About one dollar in three.

Three markets did most of the work, and the products matter as much as the destinations.

The Netherlands took more iron ore, nuclear fuel and crude oil. Germany took more copper ore. China increased across a broad spread of categories.

Not one buyer carrying the whole increase. Not finished consumer goods either — ores, fuel and metal.

There is a second figure worth having. Canada’s trade deficit with non-US countries narrowed from $6.1 billion in June to $5.1 billion in July, the lowest since January 2021. Canada is not only selling more outside the United States. The balance of that trade is improving at the same time.

And now the part that has to be said

The same release says exports to the United States fell 6.6 per cent, on lower crude oil and gold shipments.

Total exports fell 2.3 per cent to $76.1 billion — the first monthly decline in six months. Imports rose 2.2 per cent to $75.4 billion. The overall trade surplus collapsed from $4.2 billion in June to $769 million. The surplus with the United States alone dropped from $10.3 billion to $5.9 billion.

So a record month abroad did not cover what was lost to the south. It offset part of it.

Anyone presenting these figures as a clean win is not reading the whole page. What they show is a country losing its largest customer faster than it is finding replacements — while finding replacements faster than it ever has before.

Both halves of that sentence are true, and the second half is the new part.

How Canada got to ninety per cent

The dependence was not an accident of geography. It was built deliberately, and it worked.

Before the Second World War, Britain and Europe were major destinations for Canadian goods alongside the United States. The post-war decades shifted that steadily south, and two agreements finished the job.

The Auto Pact of 1965 integrated the North American vehicle industry, making Ontario an extension of the Michigan supply chain. The Free Trade Agreement of 1989 and NAFTA in 1994 did the same across most of the rest of the economy.

The Bank of Canada’s own account of this period is unsentimental about what followed: between 1988 and 2002, free trade drove growth in manufactured exports to the United States, and non-commodity exports led the expansion. Then China joined the WTO, commodity demand surged, the Canadian dollar strengthened, and Canadian manufacturing competitiveness eroded. The 2008 recession exposed how much of the non-commodity export base had thinned out, and it never fully recovered.

That is the structure the current numbers are moving against. A manufacturing relationship built for one market, and a resource economy that grew while the manufacturing one did not.

What has actually changed since 2025

The reorientation did not begin in July, and it is not confined to one commodity.

Europe. Canadian exports to the European Union rose 23.4 per cent in 2025. Under CETA, since 2016, European imports of Canadian base metals are up 143 per cent, minerals 131 per cent, energy 70 per cent, and fertiliser — largely Saskatchewan potash — 225 per cent.

Aluminium. In the first quarter of this year, 95 per cent of Quebec’s aluminium exports went to the United States. By the second quarter it was 78 per cent, and Europe’s share had gone from 0.2 per cent to 18. One smelter, Aluminerie Alouette, went from sending 4 per cent of its output to Europe to 57 per cent in a single quarter.

Oil. Until recently, most Canadian crude bound for Asia sailed south from Vancouver and transferred to a supertanker off Southern California, because the Westridge terminal cannot handle the largest ships. In June 2024, 78 per cent of Asia-bound Canadian crude went that way. Last month, none of it did — freight economics inverted, and the cargoes now sail direct. Since Trans Mountain opened, the Western Canadian Select discount has narrowed by roughly seven dollars a barrel.

Ports. Prince Rupert is 500 nautical miles closer to Asia than any other West Coast port, has the deepest natural harbour on the continent, and moved 26.3 million tonnes last year, up 14 per cent.

None of these are announcements. They are measured volumes, in four different industries, moving the same direction.

The diversification nobody is counting

There is a larger figure that the monthly goods data does not capture at all.

Global Affairs Canada’s State of Trade 2026 found that Canadian services exports tripled over fifteen years to $240.2 billion, now 23.6 per cent of total exports, up from 10.8 per cent in 1985. Digitally enabled services grew 200 per cent between 2010 and 2025, against 92 per cent for goods.

And one line from that report reframes the whole argument: services alone account for all of Canada’s $50 billion in export gains since 2022.

In 2025, services exports to non-US markets grew 11.1 per cent while services exports to the United States fell 3.7 per cent. Only 53 per cent of services exports go to the United States, against 72 per cent of goods.

Every tariff, counter-tariff, port and pipeline in this story concerns things that cross a border in a container or a hull. The fastest-growing part of Canadian exports crosses by fibre-optic cable, and nobody has worked out how to put 50 per cent on a cloud contract.

Two questions decide whether this holds

Is it structural, or is it arbitrage?

This is the serious objection and it deserves a straight answer. Several of the shifts above were driven by price, not policy.

Quebec’s aluminium went to Europe because American tariffs rose while the US Midwest premium spiked and Rotterdam’s fell. Jean Simard of the Aluminium Association of Canada expects the metal to return to American buyers once “the price builds up into the US.” Canadian crude stopped lightering off California because the Iran war pulled supertankers out of the market and made small ships cheaper. If freight rates normalise, some of that reverts.

And the aluminium case carries a warning: only about 42 per cent of the volume lost in the American market was picked up by anyone else. The rest did not find a new buyer. It simply did not sell.

Is it only resources?

Look again at what drove July: iron ore, nuclear fuel, crude oil, copper ore. These are the things Canada digs up. They are fungible, they have global buyers, and they can be redirected by changing a shipping manifest.

A tonne of ore does not care who buys it. An auto parts plant integrated into a Michigan assembly line does. The parts of the Canadian economy that can diversify quickly are diversifying quickly, and the parts that cannot are the parts where employment is concentrated — which is exactly why Oxford Economics found that two-thirds of the American jobs exposed to the coming Canadian auto tariff sit outside automotive manufacturing. The same logic applies on this side of the border.

What it amounts to

The honest summary is narrower than the headline and more interesting.

Canada has not replaced the United States. It has lost export volume to the United States faster than it has gained elsewhere, and the July trade surplus fell by more than eighty per cent in a single month to prove it.

But a third of Canadian goods now leave for somewhere else. That share is the highest in more than four decades. It has risen for three consecutive months, across unrelated markets, in categories Canada actually produces — and the balance of that non-American trade is the best it has been in five years.

Trade talks with Washington collapsed on 22 August and none have been scheduled since. The American position, from its Trade Representative, is that there is no urgency: “We’re still getting what we need from them in terms of oil, gas, potash, all of these things.”

He is right about the present tense. The question the July figures raise is how long the present tense lasts.

Canada built ninety per cent dependence on one customer over fourteen years of deliberate policy. It has taken it back to sixty-six in about eighteen months, mostly by accident, through freight rates and tariff arithmetic and a lot of ore that had to go somewhere.

What happens next depends on whether anyone treats that as a strategy rather than a side effect.

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