Root Causes: Canadian Grand Strategy and Threats to Canadian Sovereignty

What was once a ubiquitous presence in the international arena, Canada’s role and prestige have become increasingly diminished in the eyes of allies and adversaries alike (Copeland 2018, 248). Despite the attempts of the former Trudeau government to proclaim, ‘Canada’s back!’, there was minimal substantial change in terms of the perception of Canada, as well as the strength of its military and economy while “mixed signals on climate change, a lack of significant reinvestment in international policy institutions and an absence of global initiative – suggest real cause for concern.” (Ibid.) Canadian grand strategy has long relied on and been directed at the US, guided by an effort to maintain a balance between proximity and distance (McDonough 2012, 277). This strategy proceeds largely uninterrupted as long as sovereignty and independence aren’t threatened (Ibid.). However, the recent threats directed towards Canada clearly signal that this strategy needs to be restructured, as it is no longer appropriate given the tumultuous nature of its relationship with the US and the inflammatory rhetoric it has employed. 

President Trump is a populist, and populism in the North American context, as elsewhere in the world, complicates trade relationships, immigration, and cooperation (Doran, 2019). This situation requires both countries to navigate, while reaping some benefits that reforms may bring, while also managing the negative political fallout that is occurring (Doran, 2019). For Canadians, capitalizing on reform and managing the inevitable challenges that American revisionism will bring will be crucial and undoubtedly more difficult than it will be for their American counterparts. The vulnerability of the Canadian economy and military that Canada currently faces in relation to American revisionism under the new Trump administration will persist if there is no significant change in the current Canadian economic and military policies. Options need to be proposed which offer Canada a way forward that is less reliant on the increasingly volatile United States. 

MILITARY RELIANCE

The problematic military reliance of Canada on the United States has roots in the fallout of the Second World War, as “changes in military technology during and after the war meant that Canada could no longer respond to serious external threats on its own.” (Barry and Bratt 2008, 80) Unlike Europeans and Americans, Canada has not developed strategic plans to increase investment in its defense industry, particularly in areas such as munitions and military equipment production, which are essential for waging a modern war effectively (de Henning Michaelis 2023, 5). As a result, a gap is widening “in defence posture vis-à-vis its allies in the context of the return of great power competition.” (Ibid.)As a result, Canada has pursued a joint strategy with the United States (Barry and Bratt 2008). There is undoubtedly a need for increased Canadian military expenditure. However, it is a reality that Canada will still need to collaborate with the United States militarily.

 ECONOMIC RELIANCE

Despite the military dependence and vast disparity in military capabilities, the foundation of Canadian grand strategy, both economically and militarily, has always been a close and highly integrated trade relationship with the US. Each day, $1.25 billion USD in goods and services crosses the Canada-U.S. border, amounting to nearly $1 trillion USD per year (Government of Canada, 2025). Moreover, “77 percent of Canadian imports are tied to the US through production linkages” (Martin and Mayneris 2022, 360).  

One of Canada’s most significant exports to the United States is crude oil, which accounts for a significant share of Canada’s oil exports due to the country's limited refining capabilities. In 2023, crude oil exports accounted for 81% of Canada’s total crude oil production, valued at $124 billion CAD, representing 16% of Canada’s total export value (Canada Energy Regulator 2024). Of these crude oil exports, the United States received 97% (Ibid., 2024). As a result, America’s 10% tariff on Canadian oil imports, recently imposed by the Trump administration, represents a serious threat to a crucial Canadian export and a significant part of Canada’s economy, highlighting the need to enhance domestic refining capabilities to diversify potential importers of Canadian oil.

IMPORTANCE AND POLICY RELEVANCE

Given the damage and disruption that American revisionism can cause on such short notice, it is clear that there is a need for new policy directions that can help decrease the volatility of Canadian interests in response to unexpected threats, such as the contemporary situation. Former Canadian foreign affairs minister Mélanie Joly has stated outright that she believes President Trump is trying to annex Canada through economic sanctions, stating that “We need to fight back against this nonsense.” (Tasker 2025) While that’s all well and good, there are no concrete steps proposed to address threats to Canadian independence immediately or in the longer term. This highlights the concrete policy relevance of this issue, as well as the timeliness. Therefore, the policy relevance of this issue is clear.

Critique of Current Policies: Canadian Vulnerability

Canada’s current grand strategy, or effective lack thereof, is one that is still inextricably aligned with the objectives of the US, with modest trade and relationships outside of US-led global networks and alliances. This strategy of integration goes across military and economic means. This is the sad reality for Canada, as its own domestic deterrent capabilities and influence are sorely underdeveloped and ineffective. As a result, Canadian grand strategy has clearly failed to effectively perpetuate Canada’s independence and ability to project its own sovereignty. 

Due to current threats and tariffs, the Canadian policy of aligning with the United States now clearly impacts Canadian grand strategy in terms of its ability to remain sovereign and independent, without directly relying on American military and economic ties.

BOOSTING THE DOMESTIC ECONOMY: REMOVING INTERPROVINCIAL TRADE BARRIERS

One of the most effective ways to boost the Canadian economy from within is to eliminate domestic trade barriers. Despite the implementation of the Agreement on Internal Trade (AIT) in 1995 and the Canadian Free Trade Agreement (CFTA) in 2017, significant challenges and barriers to internal trade in goods and services persist (Carlberg 2021, 1).  It is estimated that the liberalization of internal trade in goods would “increase GDP per capita by about 4 percent and reallocate employment towards provinces that experience large productivity gains from trade (Alvarez et al. 2019, 2). This potential to boost GDP from within highlights the need for federal, provincial, and territorial governments to cooperate in removing internal trade barriers, all the more significant in the face of external threats.

PERPETUAL FAILURE: UNDERINVESTMENT IN MILITARY CAPACITY

Canada continually fails to meet NATO’s requirement of 2% of national GDP for defence spending. Having enjoyed American protection for decades, this neglect has persisted with minimal direct impact. However, given the growing importance of Canadian resources and territory, this is completely unacceptable. Aside from rhetoric, there has been little real increase in its own domestic defence industry, which, given the widening gap with its allies in terms of capabilities, is extremely concerning. While the newest defence policy, Our North, Strong and Free, released in 2024, echoes the previous defence policies' defence investment goals. The pledged $8.1 billion CAD over the next five years and $73 billion CAD over the next 20 years appears to be a substantial commitment (Government of Canada 2024). However, this commitment will fall well below NATO’s required 2% spending requirement (Mitchell 2024), and the NATO proposed 5% expected to be agreed at the 2025 NATO summit. Without real investment, Canada cannot credibly defend its interests and territorial integrity without expanding its overall military capacity.

Recommendations for Stronger, More Effective Canadian Grand Strategy

In response to the ongoing discussion of change and countering American revisionism, the following policy recommendations aim to reduce Canada's reliance on American markets and military security, thereby clearly signaling Canada’s sovereignty and willingness to defend it. Furthermore, these recommendations are crucial as relationships and alliances are under strain, and conflicts around the globe continue to further polarize the international political landscape. These policies aim to establish a more robust and self-sufficient Canadian military and economy. Due to unchanged policy and a lack of historical unwillingness to re-envision Canada’s position on the continent and internationally, a status quo approach is no longer an option. The following recommendations are proposed to outline a feasible path forward for addressing these threats.

THE NEED FOR CONCRETE STRATEGIC RESTRUCTURING

Canada needs to increase its domestic production capabilities and defence spending to meet the previously mentioned organizational requirements and defend its sovereignty against external threats. Diversifying Canada’s economic ties and increasing defence spending are not simple tasks. It is foolish to think Canada will ever be completely independent of American markets due to geography and historic ties, however a more independent grand strategy is necessary. Undoubtedly, separating from America, in any capacity, will impact Canadian markets and the economy. Continuing down the path of reliance is no longer a viable option. The following recommendations must be considered to combat threats being faced by Canada:

·      Actively pursue and focus on closer alignment with the European Union, even perhaps to the extent of countries such as Norway, which enjoy alignment and open trade with the EU under the European Economic Area (EEA) agreement. This will allow Canada to diversify its vast resource exports to a continent that sorely lacks its own resource wealth. In turn, they can provide further security and facilitate the exchange of goods and services.

·      Implement fiscal cuts in social spending and redirect funding towards defence, domestic production, and refining capabilities, particularly related to crude oil, as discussed above. This will allow Canada to pursue other markets while increasing its domestic defence and self-sufficiency agenda. Public spending needs to be restructured, as waste has been too long inseparable from Canadian government agendas and spending.

·      Focus on critical infrastructure and internal trade routes to bolster domestic markets while also facilitating the transport of resources from their source to their point of departure, from coast to coast, to most effectively capitalize on different global markets and trade routes.

ENOUGH IS ENOUGH: TIME TO STAND ON ITS OWN TWO FEET

Critically, it is time for Canada to stand on its own two feet. The increased importance of its resources and territory, coupled by the increasingly tumultuous relationship with the US reinforce the need for Canada to begin being its own country, outside of the American shadow. It is imperative that Canada establish new trading relationships outside of its southern neighbour and bolstering its capabilities in order to project sovereignty and be able to effectively defend its vast landscape. Diversifying its economy would immediately boost Canada’s ability to do so, as it would clearly demarcate Canada as its own sovereign nation, not under the thumb of the Americans. However this is easier said than done, as this brief has demonstrated with the incredibly integrated economy and military complex that Canada has with the US. Therefore, Canada needs to realize that this will not be an easy process,  but one it must undertake nonetheless. This process is discussed in further detail in the following section.

The Final Recommendation: Restructuring Canadian Grand Strategy

The previously discussed policy options relate to Canada’s willingness to increase its defence spending and diversify its economic reliance from the United States. Clearly, Canada’s best option is to pursue economic alignment with the EU. I recommend strategic realignment be realized through the following steps.

INITIATING DIVERSITY: BUILDING CLOSER TIES ABROAD

With the aim of minimizing as many of the negative long-term impacts as possible, Canada should  initiate discussions with the EU as soon as possible regarding economic integration, possibly under the EEA framework. Anti-Trump sentiment is high in Europe, as they also face potential tariffs and American revisionism, making it an ideal time for Canada to capitalize and integrate more deeply militarily and economically with the EU. This will enable Canada to mitigate the effects of American tariffs and enhance its security to prevent similar threats in the future.

THE PARTICULARS: JUSTIFYING ACTION DOMESTICALLY

During the process of aligning with the EU and building up domestic production and transport capabilities, Canada will need to address domestic pushback that will inevitably arise as it diversifies away from the US and towards Europe. The government will need to effectively argue that integration with the EU offers Canada the best avenue for its future. Complete disconnection from America is not possible or feasible; however distancing and diversification will allow Canada to effectively respond to similar situations in the future. Therefore, while the US will undoubtedly be against this and may impose further tariffs or trade restrictions, it is a necessary risk to reinforce Canada’s sovereignty, independence and lack of reliance on America.  

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