Despite ongoing discussions about diversifying trade, Canada is facing a setback. Non-U.S. exports fell for the second consecutive month in July, highlighting the challenges of reducing reliance on a volatile trading partner.

Statistics Canada reports a staggering 8.6 percent decline in exports to countries other than the U.S. in July, following a 4.2 percent drop in June. This alarming trend pushed the share of non-U.S. exports back to levels not seen since October, prior to President Donald Trump's election.

Prime Minister Mark Carney has been vocal about the necessity of diversifying Canada’s trade partners. Recently, he pledged a $500 million investment to explore new markets for Canadian lumber and promoted exports during his trips to Germany, Poland, and Latvia.

However, experts have cautioned that establishing robust trade relationships globally will not happen overnight. Following Trump’s return to the White House, Canadian exporters have experienced a turbulent ride.

While there was an initial rush to export goods to the U.S. before tariffs were implemented, Canadian exports took a sharp nosedive as these tariffs drove up prices, particularly for steel and aluminum. Yet, recent data shows that exports to the U.S. are beginning to recover, buoyed by increased shipments of oil and passenger vehicles.

Interestingly, the surge in non-U.S. exports during the first half of the year was largely propelled by heightened gold exports to the United Kingdom. However, trade volumes with Canada’s major partners remain stagnant.

In a silver lining, the kickoff of the expanded Trans Mountain pipeline in May 2024 has dramatically increased the share of Canadian crude oil exported to non-U.S. markets, climbing to 7.9 percent in July, a significant rise from the average of just 2.7 percent earlier this year.