Last week, Prime Minister Mark Carney was in Strasbourg to address the European Parliament. He and European Commission President Ursula von der Leyen both expressed openness to a new, deepened relationship between Canada and the EU – an “alliance for the future”.
Almost as quickly as Donald Trump did, Pierre Poilievre came out against this yet-to-be-defined arrangement declaring Canada would “never be the 28th state of the European Union” – something, to be clear, nobody is proposing.
To be fair to Pierre, his opposition did not come from the same place as Donald Trump’s opposition. His opposition, as he described it, was rooted in what he saw as a threat to Canadian sovereignty.
Pierre Poilievre asks what EU laws will apply to us, what binding agreements we will make. While those are fair questions, his knee-jerk opposition comes from too narrow a definition of sovereignty and expose a fundamental misunderstanding about what it takes to be sovereign.
His response betrays a fixation on formal mechanisms at the expense of practical results. He asks: who has the formal authority to decide? Can we unilaterally make the same decisions we made before we made this agreement?
But every agreement between nations constrains unilateral action in some respect and I think Pierre and I would agree not every agreement between nations is bad.
The question we need to ask ourselves is different. Sovereignty is about capacity to act. When we look at the two paths in front of Canada – status quo and deeper partnership with Europe – which gives Canada more capacity to act?
DOOR #1: THE STATUS QUO
For a long time, Canada could afford to have relatively few strategic choices because the choices we had were extraordinarily good.
The United States was overwhelmingly our dominant customer and security partner. Globalization had made supply chains cheap and dependable. International institutions worked reasonably well. Capital moved freely and our geography was an advantage.
Canada’s prosperity grew inside that environment, but it also produced dependencies. In 2024, 76% of our exports went to the United States.
To put that in context, the G7 country with the next largest share of exports going to the United States was Japan, at 19%.
If you thought of Canada as a business, as a shareholder you would be very alarmed by that level of dependence, for precisely the reasons we now see playing out in international relations.
In business and economic circles, we often talk about Porter’s Five Forces – a framework for assessing competitive pressures, bargaining power and risk1. One of its basic insights is that overreliance on a single customer gives that customer enormous leverage over price, terms and conditions.
In other words, when you have only one customer, you can be forced to accept terms you otherwise would not. You remain legally free to walk away, but in practice you have fewer choices. For a country, that means you are less sovereign.
The risk this reliance presents is clear to any Canadian who has lived through the last two years: a large buyer – the United States – can decide to use its leverage to their relative advantage and our relative disadvantage.
DOOR #2: MORE CHOICES
Faced with this now-realized risk, Canada is diversifying trade rapidly.
According to the latest available Statistics Canada data, the share of exports going to the United States has dropped from 76% to 66% in the last month of data available.
That was not accomplished through Canada dismantling the old relationship with the United States. It was done through adding choices. Twenty new trade and security deals have been signed since the last election. Agreements that on paper bind Canada and our counterparties to certain things – as all agreements do and as any agreement with the EU will certainly do.
Pierre Poilievre sees deepening relationships with non-U.S. markets as Canada reducing its sovereignty. I see it quite differently.
These agreements give Canada options, and in doing so, make us more free to act as we choose.
We can keep the American market and build markets in Europe and Asia. We can attract foreign capital and put domestic capital to work. We can trade internationally and find more customers for Canadian businesses. We can expand foreign supply chains and make strategic investments in domestic production. We can deepen alliances and increase our own military capacity.
These should not be treated as contradictions. They should be treated as how a serious and sophisticated middle power operates in 2026 – through leveraging natural strengths and strong relationships to make sure we are never beholden to one nation, one power, one customer.
SOVEREIGNTY IS CAPACITY, AND WE BUILD CAPACITY THROUGH ENGAGING WITH THE WORLD
There is exactly one country in the world that aims to be entirely self-sufficient – unshackled from the burden of cooperation – and you can ask the people of North Korea who have escaped it how they feel about it.
The objective of Canadian trade policy cannot be isolation, or independence from everyone else. That is too narrow a view of sovereignty and one that drives away from Canada’s strengths, rather than towards them.
The objective has to be to build a country with enough economic heft, enough military strength, enough cultural presence and enough alliances that we can retain meaningful choices about our own future.
Any deeper agreement with Europe will create new obligations, and those terms should be scrutinized on their merits. But entering into agreements is not inherently a surrender of sovereignty.
We have agreements with the United States. They helped make Canada prosperous, and it will remain an indispensable relationship. But we cannot fear or fearmonger deeper integration with other allies. Such agreements reduce our reliance on one market, one military and one culture. They increase our capacity. They make us more free to act – and more sovereign in global affairs.
Deeper relationships elsewhere give Canada more options.
That’s what sovereignty looks like in practice.
Created by Harvard Business School professor and economist Michael Porter, this framework looks at a business or industry’s buyer power, supplier power, competitive rivalry, the threat of new entrants and the threat of substitutes.