Canada seeks trade deals at G20 as U.S. tensions disrupt global system

Explainer

International Trade Minister Maninder Sidhu is meeting with counterparts from the European Union, India and other nations at a G20 summit in Milwaukee this week as Canada works to reduce its reliance on the United States.

"In a more unpredictable world, trade diversification is Canada's Plan A," Sidhu said.

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He is expected to speak with U.S. Trade Representative Jamieson Greer during the two-day meeting of trade ministers from the world's biggest economies, but a specific time and format for that conversation have not been set.

Negotiations between Canada and the U.S. broke down in August, after Canada rejected the latest U.S. deal.

What are Canada's priorities at the G20 meeting?

Sidhu said Canada's key priorities for the meeting include advancing a digital trade agreement with the European Union, advancing talks with the South American trade bloc Mercosur, and working on an economic partnership agreement with India.

"We are moving at pace to secure greater access to some of the world's largest and fastest-growing economies," he said in an email.

Sidhu has bilateral meetings scheduled for Wednesday with the trade ministers for France, Australia and Turkey, and is meeting with India's representative on Thursday.

He said he wants to use the meeting to pitch Canada as an "open, predictable and rules-based" trading partner.

"I am focused on delivering a clear message to our G20 partners: Canada is committed to a strong, rules-based global trading system and is a reliable partner in an uncertain world," he said in a media statement.

Why is Canada seeking to diversify its trade?

Canada is looking to reduce its economic reliance on the United States in response to Washington repeatedly targeting Canadian goods with tariffs.

The latest American action landed Tuesday, when an import ban on certain Canadian products, including most alcoholic drinks, came into effect.

Canada walked away from talks on a potential trade deal with the U.S. last month and imposed its own suite of retaliatory tariffs on $28 billion worth of American goods.

The bans on American alcohol sales introduced by all provinces apart from Alberta and Saskatchewan have been a major irritant for the Trump administration.

Sidhu said Canada's non-U.S. trade has increased by 17 per cent, or $33 billion, in the past year, and nearly one-third of Canadian exports now go to destinations outside the United States, the highest share in 40 years.

What U.S. proposals are causing concern?

The Trump administration is pushing to change the World Trade Organization's Most-Favoured Nation (MFN) rules, which are meant to prevent discriminating against another WTO member country.

"You have to give equal treatment to members of the WTO community," said Martha Harrison, a Toronto-based trade lawyer.

"It is not dramatic to say that if the MFN rule is softened … it will create distinctions and a trade environment globally that is even more unpredictable than it is now."

In an opinion essay published in August 2025, Greer argued the rules of international trade "cannot be a suicide pact" and that the U.S. has "laid the foundation for a new global trading order."

Harrison said the U.S. position is that "MFN was designed for a world where countries broadly played by similar rules" and that some countries benefit from WTO access while pursuing state-led industrial policies.

However, changing the MFN rules would lead to more uncertainty and confusion for businesses that rely on international supply chains, she said.

"It impacts, ultimately, not just the trading relationship between Canada and the U.S., but trading relationships around the world that are governed by the rules based system."

What is the state of the global trading system?

The meeting is being held amid a global trade disruption caused in large part by U.S. President Donald Trump's trade agenda.

On Sept. 15, the WTO urged its members to reform global trade rules or risk a slide into fragmentation that could significantly reduce economic output and hit poorer countries hardest.

In its annual report, the WTO said existing rules have struggled to keep pace with shifts in economic power, the rise of industrial policy, digital trade and escalating political tensions between major powers.

The organization has long struggled to find agreement on reforms in its consensus-based system, as its 166 members are at different stages of economic development and often have conflicting interests.

Nosy Mag reported in September that Foreign Affairs Minister Anita Anand said Canada is building renewed partnerships with China and India under a policy of 'values-based realism.'

"Every meeting at the G20 is a chance to open more doors for Canadian workers and businesses, and we are moving at speed to seize it," Sidhu said.

With files from The Canadian Press, CityNews and CBC News