I’ve spent the last week shuttling between Brussels and Washington, tracking the tremors of what could become a significant realignment in transatlantic trade relations. As European officials quietly prepare for a potential second Trump presidency, the atmosphere in both capitals reveals a stark contrast between public posturing and private contingency planning.
“We’re not in panic mode, but let’s call it heightened preparation,” a senior EU trade official told me during a coffee meeting near the European Commission headquarters. Speaking on condition of anonymity due to the sensitivity of the discussions, he acknowledged that the Trump campaign’s recent signals about prioritizing a US-EU trade deal have accelerated internal planning that began months ago.
The potential implications for Canada are profound but rarely discussed in Ottawa’s policy circles. After securing the CETA agreement with Europe and weathering the USMCA negotiations, Canada now faces the prospect of being sidelined while its two largest trading partners forge a new economic relationship.
During a visit to the Port of Antwerp last Tuesday, I watched containers of Canadian goods being unloaded alongside American shipments. The Belgian port official guiding me gestured toward the steady stream of cargo. “This could all look very different in a year,” he remarked. “The rules of the game might change entirely.”
The numbers tell a concerning story. Canada’s exports to the EU reached $64.7 billion last year according to Statistics Canada, while EU-US trade flows exceeded €830 billion. If Trump’s campaign promises materialize into preferential access for American goods in European markets, Canadian exporters could face significant competitive disadvantages.
Former Bank of Canada governor Mark Carney, who I interviewed at a financial conference in Washington, expressed measured concern. “The potential for trade diversion away from Canadian exporters is real,” Carney said. “What’s particularly challenging is the timing – this comes as our economy is already navigating significant headwinds.”
Trade experts point to several Canadian sectors particularly vulnerable to displacement: agricultural products, pharmaceutical goods, advanced manufacturing, and increasingly, critical minerals. European appetite for securing supply chains for these materials makes them prime candidates for any new US-EU arrangement.
Walking through Brussels’ European Quarter, I noticed how the diplomatic dynamics have shifted since my last visit six months ago. European officials who once dismissed Trump’s trade rhetoric now speak of it with strategic calculation. The continent’s energy vulnerabilities exposed by the Ukraine conflict have created new motivations for transatlantic cooperation, even on Trump’s terms.
“Europe needs American energy security guarantees more than ever,” explained Jean Monnet, a researcher at Bruegel, the Brussels-based economic think tank. “That creates leverage Trump didn’t have during his first term.”
For Canada, the challenge extends beyond immediate economic impacts. Our carefully cultivated image as a reliable trading partner and champion of rules-based international commerce faces a stress test if major powers move toward bilateral dealmaking that bypasses multilateral frameworks.
In Ottawa, the response has been muted. Multiple requests for comment from Global Affairs Canada yielded only general statements about the importance of trade diversification. Behind closed doors, however, Canadian diplomats are scrambling to understand what negotiating space might remain if a Trump-EU deal gains momentum.
The timing couldn’t be more precarious. With the Canadian economy showing signs of weakness and exports underperforming, any disruption to established trade patterns could amplify domestic economic challenges. The loonie has already reacted to speculation about changed trade patterns, dropping nearly half a cent after Trump’s recent comments about prioritizing European trade relations.
At a manufacturing facility outside Toronto last Friday, I spoke with executives from a mid-sized auto parts supplier who exemplify the anxiety rippling through export-dependent businesses. “We’ve spent years optimizing our production to serve both North American and European markets under current rules,” said operations director Sarah Tremblay. “If those rules change suddenly, we’re looking at massive adjustment costs.”
The potential Trump-EU trade realignment also raises profound questions about Canada’s broader foreign policy positioning. After years of working to distinguish Canadian approaches from American ones – particularly during Trump’s first term – Ottawa may face uncomfortable choices about whether to align with or diverge from Washington’s new economic statecraft.
“Canada risks being caught in a classic middle power squeeze,” noted Richard Haass, president emeritus of the Council on Foreign Relations, during our conversation at a Washington think tank event. “When great powers reorient their relationships, countries like Canada must adapt quickly or risk marginalization.”
The path forward requires more than reactive diplomacy. Canadian officials need to identify specific vulnerabilities in key export sectors, engage provincial governments whose resources fuel international trade, and possibly accelerate efforts to diversify beyond traditional markets.
Most crucially, Canada needs to determine whether its interests are best served by seeking inclusion in any potential US-EU framework or by doubling down on its traditional support for multilateral institutions like the WTO, which would likely be further weakened by major bilateral deals.
As I filed this report from my flight back to Washington, the uncertainty was palpable. The economic architecture that has benefited Canada for decades appears increasingly fragile, challenged not just by Trump’s unconventional approach to international economics, but by a Europe increasingly willing to pragmatically engage with it.
The coming months will reveal whether Canada can transform this challenge into opportunity or whether we’ll be left adjusting to trade patterns shaped by decisions made in Washington and Brussels, with little Canadian input.
