Dr. Bryan Brulotte is Chairman of Sterling-Trust, a Canadian private equity firm. He brings more than four decades of leadership experience spanning the military, private, and public sectors.Canada’s deteriorating economic relationship with the United States (US) is forcing us to confront an uncomfortable question: if we become less dependent on the Americans, where exactly do we turn? Increasingly, the answer from Ottawa appears to include China. There is a certain logic to this, but there are also considerable risks.China remains one of the world’s largest economies, a major consumer of agricultural commodities, energy, and natural resources, and an important potential market for Canadian exporters. For Western Canada in particular, improved access to China could provide badly needed alternatives at a moment when our relationship with Washington has become considerably less predictable. But Canada needs to be careful: diversification is sensible, while replacing excessive dependence on the US with strategic dependence on China is not.The numbers demonstrate both the opportunity and the limitations. In 2025, approximately 72% of Canadian merchandise exports still went to the US, while only about 4.4% went to China. Canadian merchandise exports to China nevertheless reached $34.4 billion, demonstrating that Beijing already represents a significant market while remaining nowhere close to replacing the economic relationship Canada has with the US.Prime Minister Mark Carney’s government has already demonstrated its willingness to pursue a more pragmatic economic relationship with Beijing. The reopening of the Canadian market to Chinese electric vehicles, accompanied by improved Chinese access for Canadian agricultural products, represents an important change in direction. For Canadian farmers facing trade barriers and uncertainty elsewhere, better access to the Chinese market is understandably attractive.We should pursue those opportunities where they genuinely advance Canadian interests. Two-way merchandise trade between Canada and China totalled approximately $125 billion in 2025, consisting of about $34.4 billion in Canadian exports and $90.6 billion in imports from China. That is substantial commerce, and there is nothing inherently wrong with selling more Canadian agricultural products, potash, minerals, and energy to Chinese customers..The mistake would be confusing trade with strategic alignment. Our relationship with the US is fundamentally different from our relationship with China, regardless of how frustrated Canadians may presently be with Washington. Canada and the US share geography, deeply integrated supply chains, continental security arrangements, democratic institutions, and more than a century of overwhelmingly peaceful relations.China cannot, and should not, become an alternative US for Canada. The sheer difference between the roughly 72% of our merchandise exports going south and the 4.4% going to China demonstrates why such a strategy would be economically unrealistic. Geography, infrastructure, and decades of economic integration mean the US will remain Canada's indispensable economic partner even during periods of serious political disagreement.The political and strategic realities surrounding China also matter. China is an authoritarian state and an increasingly assertive geopolitical power, and Beijing has demonstrated that it is prepared to use economic relationships as instruments of political influence. Canada itself has experienced the consequences when political disagreements spill into trade and diplomacy.Nor should we underestimate China's industrial power. According to the United Nations Industrial Development Organization, China accounted for approximately 32% of global manufacturing production in 2024, more than the combined share of the US, Japan, Germany, and South Korea. That extraordinary concentration of manufacturing capacity explains why China offers enormous commercial opportunities, but it also illustrates why excessive dependence on Chinese supply chains carries strategic risks.That does not mean Canada should isolate China. It means we should understand the country with which we are dealing and distinguish between legitimate commerce and strategic vulnerability. Selling wheat, canola, potash, lumber, LNG, or other resources to China is one thing; allowing potentially hostile state-linked interests significant control over critical minerals, telecommunications, ports, energy infrastructure, or sensitive technologies is something entirely different..Canada should therefore adopt a two-track China policy. The first track should be commercial pragmatism, expanding exports where doing so benefits Canadian producers, particularly in agriculture, energy, and natural resources. Western Canadian farmers should not become collateral damage in geopolitical disputes when commercially reasonable arrangements can be reached, nor should Canadian energy producers be prevented from accessing Asian markets because of outdated assumptions about where our exports should go.This is another reason Canada needs considerably more export infrastructure to the Pacific. The Trans Mountain expansion was an important step, but it should not represent the end of Canada's ambition. LNG facilities, additional port capacity, rail infrastructure, and eventually additional pipelines would give Canadian producers something governments have discussed for decades but rarely delivered: genuine access to competing global markets.The second track must be strategic protection. Canada should maintain stringent restrictions on Chinese participation in critical infrastructure and sensitive technologies, while investments involving critical minerals, telecommunications, artificial intelligence, advanced computing, defence-related technology, and major infrastructure should receive rigorous national security scrutiny. Where the risks are unacceptable, Canada should simply say no.This is not protectionism; it is prudence. The emerging Western approach toward China is not complete economic separation, which would be extraordinarily costly and probably unrealistic, but rather reducing vulnerabilities in areas where excessive dependence could become a national security liability. Canada should pursue precisely the same approach.There is also a larger lesson here for Ottawa. Diversification should not mean simply finding another enormous foreign market upon which Canada can become dependent, because real diversification means creating multiple options. That means deeper economic relationships with Europe, Japan, South Korea, India, Australia, and the rapidly growing economies of Southeast Asia..Most importantly, diversification means making Canada itself a more competitive place to invest, build, and produce. For decades, Canadian governments have spoken about trade diversification while maintaining regulatory and infrastructure policies that make diversification extraordinarily difficult. We cannot sell substantially more energy to Asia without pipelines and LNG terminals, become a major supplier of critical minerals without mines, or expand exports efficiently without ports, railways, and transportation infrastructure.Trade policy ultimately depends upon domestic economic policy. Canada already has considerable advantages: abundant natural resources, access to three oceans, a highly educated population, and trade agreements covering many of the world's largest economies. What we have too often lacked is the political determination to turn those advantages into economic capacity.None of this diminishes the importance of repairing our relationship with Washington. The US will remain Canada's largest trading partner, our principal security partner, and the most important economic relationship we possess. The current trade confrontation should change how Canada manages that relationship, but it cannot change geography.What it should do is remind us of the danger of having too few options. Canada should engage China confidently but cautiously, selling Canadian products wherever legitimate markets exist while building the infrastructure necessary to reach those markets. At the same time, we must protect strategic industries, critical infrastructure, and technologies essential to our sovereignty and security.The objective should be neither confrontation with Beijing nor dependence upon it. Canada should trade with China and use the Chinese market as one part of a much broader diversification strategy. But we should never make the mistake of believing that economic diversification requires strategic dependence, because in the uncertain world Canada now faces, the countries with the greatest freedom of action will be those that preserve the greatest number of choices.Dr. Bryan Brulotte is Chairman of Sterling-Trust, a Canadian private equity firm. He brings more than four decades of leadership experience spanning the military, private, and public sectors.
