Canada looking towards India for trade to diversify business partners and reduce dependence on US: Trump’s tariff wars may result in another deal

The foreign policy of the United States, designed to impose its will on other nations, appears to have produced the opposite effect. The targeted parties, including key allies such as the European Union, are now actively seeking alternative relations and working to reduce their dependence on Washington. This has also contributed to a thaw in ties between significant economies like India and China.

Likewise, Canada, which was historically a close partner of the United States, has also joined the league as their diplomatic links have sharply declined. This downturn has been exacerbated by President Donald Trump’s frequent characterisation of Canada as the “51st US state,” threatening its sovereignty.

On the other hand, the previously strained links between Ottawa and New Delhi under Prime Minister Justin Trudeau seem to be improving as Canada aims to establish a robust trade partnership with the Modi government. Energy and essential minerals are going to form the foundation of this future alliance as the two nations restore their relationship after a protracted diplomatic schism.

Trade in energy and critical minerals, dig at global hegemons, praise for India and EU FTA

Canada’s Energy and Natural Resources Minister Timothy Hodgson said that India’s anticipated increase in energy demand presents a “great opportunity” for his country, which has substantial reserves of oil, gas and vital minerals. He remarked, “We produce 6% of the world’s oil today, and India gets less than 1% of its oil from Canada.” He mentioned that both nations would become stronger, more resilient and secure if that proportion reached a greater scale.

The comments were made to Bloomberg Television on 28th January (Wednesday) at the India Energy Week in Goa. He attended the program on the invitation of Minister of Petroleum and Natural Gas Hardeep Singh Puri. It was the first high-level participation of a cabinet minister from a Western country. Furthermore, Hodgson did not refrain from taking an indirect shot at the Trump administration during the event.

He said that exporting 98% of its energy to the United States was a “strategic blunder”, and saw an opportunity to work with India. “We used to be in a world where we sought to integrate with our closest trading partners and we now find that that integration is used for coercion or tariffs are used to gain leverage. Canada now needs to rewire its economy and build relationships beyond those with its neighbours,” he highlighted.

The minister also referred to the United States as “hegemons” and expressed, “What is happening in the world today is not a gradual economic transition. It is a rupture. The hegemons of the world have decided that the rules-based order is no longer how the world will work. They have decided that’s not the way the world’s going to work anymore.”

He described the Free Trade Agreement (FTA) between India and the European Union as the “perfect” reaction to global hegemons that use tariffs and economic integration as intimidation tactics. He stressed that the former’s intention to sign the deal sent a strong statement in favour of free trade and dependable allies.

Hodgson pointed out, “What you just did with the EU signing, the mother of all deals, was a perfect example of how to say no (to hegemons). We’re not going to live in a world where the strongest put tariffs on everyone else. We’re going to live in a world where we believe in free trade, where we believe in trusted relationships.”

He even noted that trade between Canada and India is currently just $30 billion and Prime Minister Mark Carney wants to double this figure by the end of the decade.

India and Canada release a joint statement on energy cooperation

Puri and Hodgson had a meeting after which the former announced that a delegation would be sent to discuss joint efforts on crucial minerals. A joint statement was also released, which outlined Canada’s goal of becoming an “energy superpower” through a variety of exports, with India being seen as a “natural and symbiotic” partner because of its size and potential for long-term demand.

It read, “The importance of energy security and diverse energy supply chains. India, as a major consumer and Canada as a safe, secure and reliable supplier, can act in partnership to deepen trade and ensure stable and secure energy supplies. The two sides will collaborate to promote and strengthen cooperation across trade in the energy sector comprising services.”

Meanwhile, Canadian officials disclosed that as global trade dynamics change especially due to protectionist measures by the United States their country is firmly turning towards India to strengthen energy and vital mineral relations. They are additionally communicating with foreign partners to form fresh frameworks for the trading of important minerals including off-take agreements and strategic stockpiling.

This could entail supplying its “highest quality” uranium to assist India in reaching its objective of constructing 100 gigawatts of nuclear power by 2047. Canada’s 12 million-ton-per-year plant began production in June and is projected to expand to a capacity of 50 million tonnes and hence it is in a position to supply India with an abundance of Liquefied Natural Gas (LNG).

Canada extends invitation to Union Minister Piyush Goyal

Canada has indicated that it intends to accelerate the start of formal negotiations for a free trade agreement (FTA) with India marking a restart in bilateral trade engagement. The talks were put on hold in 2023 under the hostile Trudeau government. Maninder Sidhu, the country’s Minister of Export Promotion, International Trade and Economic Development has invited Piyush Goyal, the Minister of Commerce and Industry to visit the nation during the third week of next month.

An official conveyed, “Canada has expressed its desire to speed up the FTA negotiations,” reported The Times of India. The two nations have decided to restart the proposed accord with officials highlighting that the last two years have witnessed a dramatic shift in the global trade environment which necessitated a new strategy.

Commerce Secretary Rajesh Agrawal earlier stated that Canada and India are finalising the terms of reference (ToR) to formally begin negotiations. The agreement’s scope and procedures would be underscored in the ToR. Brij Mohan Mishra and Bruce Christie have been selected as chief negotiators.

PM Mark Carney to land in India to ink crucial deals

Dinesh Patnaik, India’s High Commissioner to Canada, told Reuters that Canadian Prime Minister Mark Carney would likely come to India during the first week of March to sign agreements on uranium, energy, minerals and artificial intelligence. He is trying to expand Canada’s connections outside of its main trading partner, the United States due to the eroding ties.

According to Patnaik, formal talks for a Comprehensive Economic Partnership Agreement (CEPA) with India might begin in March as well. The nations decided to resume their delayed trade negotiations in November. During his visit, Carney is set to sign multiple agreements on nuclear energy, oil and gas, environment, artificial intelligence and quantum computing alongside education and culture.

“A 10-year (Canadian) $2.8 billion uranium supply deal is likely to be included,” the Indian diplomat highlighted and mentioned that a pact on critical minerals and crude oil alongside LNG transactions could transpire in the coming days. The primary accomplishment of this visit could be a 10-year deal on uranium supplies to India which might even feature a deal on liquefied petroleum gas (LPG).

Patnaik remarked that Finance Minister Nirmala Sitharaman and Commerce Minister Piyush Goyal would probably travel to Canada in the near future. He added that National Security Advisor Ajit Doval is also scheduled to go to Ottawa next month as part of routine meetings between the two nations to share intelligence and talk about security measures.

“There ‍are plans for the prime minister to visit at some point this year and it will depend on the progress we make,” Hodgson also confirmed. “We know that India is a major nuclear country and it has major plans ‌to grow ‌its civilian use of nuclear energy. So that would be one of the topics I expect that we will discuss with my counterpart. We need to focus on economies that are large and growing. India squarely falls into that category. It is a growing user of critical minerals that Canada can supply,” he stated before his India trip.

Carney replies to Trump

The nosedive in the relationship between Canada and the United States was showcased during Carney’s speech at the World Economic Forum in Davos where he warned middle powers like his country not to expect “compliance” to protect them from major power aggression, asserting that the rules-based international system headed by Washington for decades was experiencing a “rupture.”

He reiterated, “The world has changed. Washington has changed. There’s almost nothing normal in the United States now,” while addressing Canada’s House of Commons and highlighted the need to formulate economic ties with other nations.

Carney even declared, “Canada doesn’t live because of the United States. Canada thrives because we are Canadian,” in a national address. The counter took place after Trump claimed, “Canada lives because of the United States” at the World Economic Forum.

Conclusion

A recent “fruitful conversation” between External Affairs Minister S Jaishankar and Canadian Foreign Minister Anita Anand amid the Republic Day programs restored the diplomatic momentum between India and Canada. They talked about sustaining regular high-level exchanges, forming economic alliances and boosting engagement in artificial intelligence.

Canada faces the risk of punitive measures as trade tensions with the Trump administration continue to escalate. Therefore, Anand emphasised the value of the diversification efforts and asserted that Washington’s threats “won’t be derailed.” She expressed that Canada’s long-term goal is to grow its exports outside of the United States in ten years and conveyed, “That is why we went to China, that’s why we will be going to India and that is why we won’t put all our eggs in one basket.”

Trump has threatened to impose 100% tariffs on Canadian goods if the country becomes a transit point for Chinese exports into the United States. Carney responded that his nation honours its pledge to abstain from pursuing free trade deals with non-market economies under the United States-Mexico-Canada Agreement.

The relationship with India likewise deteriorated after it rejected his claims of mediating a ceasefire between New Delhi and Islamabad. Afterwards, 50% tariffs were implemented on the nation including 25% for purchasing Russian oil and gas, blaming the Modi government for fuelling the Ukraine war.

The two countries affected by Trump’s erratic policies and obnoxious claims are currently working to mend their fractured ties which were at the lowest due to Trudeau’s unfounded allegations against the Modi government and his blatant support for Khalistani terrorists and anti-India elements in his nation.

Canada seems to have regained some clarity, at least for the moment and acknowledged the importance of fostering a relationship with India after the unexpected series of events with the US.