For decades, Canada was one of those economies for which geography seemed almost like destiny. The vast US market begins directly south of the border, while automotive supply chains, energy flows and industrial production are deeply integrated across North America. Around 70 percent of Canadian exports still go to the United States. But the trade conflict with Donald Trump is changing the calculation. Prime Minister Mark Carney is now explicitly seeking much closer economic ties with Europe — and for Germany, that could mean considerably more than additional exports.
Carney is calling for a »unique alliance«
Canadian Prime Minister Mark Carney has ruled out EU membership but is seeking a much deeper form of cooperation.
He has described the objective as a »unique alliance« with the European Union. Reports suggesting that Canada could eventually obtain some form of associate status have not been confirmed by Carney, and no established EU status of that kind currently exists for Canada.
The direction, however, is clear: Ottawa wants goods, services and, in selected strategic sectors, workers to move more easily between the two economic areas.
The talks now extend far beyond conventional tariff policy.
Energy, artificial intelligence, defense and critical minerals are on the agenda, along with joint infrastructure projects including data centers, undersea cables and energy transport facilities.
The timing is no coincidence.
Canada is embroiled in an escalating trade conflict with the United States. New US tariffs are hitting or threatening precisely those sectors whose supply chains have been integrated across the border for decades.
Around 70 percent of Canadian exports still go to the United States.
Europe cannot replace that market.
But Ottawa clearly wants to prevent economic dependence from becoming political vulnerability.
Carney heads to Strasbourg
The shift is becoming visible this week.
Carney is traveling to Strasbourg and the United Kingdom from September 15 to 17. In Strasbourg, he is due to address the European Parliament, attend European Commission President Ursula von der Leyen’s State of the Union address and hold talks focused on trade, investment and security.
At the same time, Canada is reshaping its domestic investment strategy.
At a major investment summit in Toronto, Carney is promoting more than 160 projects spanning mining, energy, technology and infrastructure. The ambition is to mobilize more than C$1 trillion in investment over the coming years.
Ottawa is therefore linking trade diversification with industrial policy.
Canada does not merely want new markets for products it already exports. It wants international capital to help expand domestic mineral processing, energy infrastructure, data centers and advanced manufacturing.
Europe is an obvious partner for that strategy.
Germany in particular.
German-Canadian trade is already growing
The economic relationship is starting from a substantial base.
According to the Canadian government, bilateral trade in goods and services between Germany and Canada exceeded C$38 billion in 2025. Germany is also one of Canada’s important partners in science, technology and industrial innovation.
Canadian trade statistics show a notable shift.
Canada exported around C$9.2 billion worth of goods to Germany in 2025, an increase of roughly 35 percent from the previous year. In the opposite direction, Canada imported C$25.1 billion worth of German goods, up 6.3 percent, with machinery accounting for an important part of that growth.
Those figures are based on Canadian customs statistics and may differ from German trade data because of different methodologies.
The direction, however, is clear: Germany is already deeply embedded in the relationship.
And the sectors in which Canada now wants to deepen its European ties overlap strikingly with areas of German industrial strength.
German machinery meets Canadian investment demand
Canada is resource-rich, geographically vast and one of the world’s most advanced economies.
It also requires significant investment in extraction, processing, energy, infrastructure and industrial automation.
That is a familiar export profile for German industry.
Machinery and plant manufacturers supply equipment for mining, energy generation, industrial production and logistics. German automotive companies and suppliers are integrated into North American value chains. Chemical, pharmaceutical, electrical-engineering and professional-services companies can also benefit from greater investment and more open markets.
The CETA trade agreement has already removed many barriers.
Since provisional application began in 2017, almost all tariffs in bilateral trade have disappeared. German manufacturers can generally export machinery, vehicles and chemical products to Canada tariff-free. CETA has also opened Canadian public procurement more widely to European companies.
A new alliance would therefore not be starting from scratch.
It would build on an already highly liberalized economic relationship and extend cooperation into sectors that were far less strategically important when CETA was negotiated.
Critical minerals are becoming central
The most obvious example is critical raw materials.
Europe is trying to reduce its dependence on China for lithium, nickel, cobalt, graphite, rare earths and other strategic resources needed for batteries, electric motors, wind turbines, semiconductors, defense systems and other advanced technologies.
Canada has significant mineral resources and wants to expand domestic processing and value creation.
For Germany, this is about more than secure imports.
A deeper partnership could also create opportunities for German plant engineering, recycling, chemical processing and mining-technology companies.
Europe’s need is substantial. The EU has designated strategic raw-material projects and created financing mechanisms, yet numerous project developers continue to warn about financing gaps and slow implementation.
Canada cannot simply replace China. China’s processing capacity and supply-chain dominance are far too extensive for that.
But Canada could help build a second supply structure with considerably lower geopolitical risk.
Defense integration is already further advanced
In one sector, integration has already moved surprisingly far.
Since June, Canada has officially been the first non-European country whose companies and products can participate in the EU’s SAFE defense financing instrument.
SAFE provides up to €150 billion in loans to EU member states for joint defense procurement and expansion of industrial production capacity.
That creates new industrial links.
Canadian companies can take part in joint procurement projects, while European — including German — companies gain additional opportunities to cooperate with Canadian partners.
Germany and Canada already work closely in areas including dual-use technologies, aerospace, critical minerals and defense.
A deeper EU-Canada alliance could turn those relationships into a significantly larger market.
Defense also demonstrates that Carney’s proposal is not simply about another trade agreement.
It is about connecting economic policy with strategic security.
AI is becoming part of trade policy as well
The explicit inclusion of artificial intelligence is equally significant.
Canada has established AI research centers and wants to attract major investments in data centers and digital infrastructure. Europe, meanwhile, is debating its dependence on American cloud and AI providers with increasing urgency.
ECB President Christine Lagarde warned this week that Europe risks developing a new form of strategic dependence on critical AI technologies. She called for greater European computing capacity and infrastructure.
Canadian-European cooperation would not eliminate that dependence. Canada itself remains technologically intertwined with the United States.
But it could create additional investment and infrastructure links between two economic areas that share broadly similar approaches to the rule of law, privacy and rules-based trade.
For German technology, energy and infrastructure companies, that too represents a market.
CETA also shows how slowly Europe can move
There is, however, an awkward detail in the new push for integration.
CETA has been provisionally applied since September 2017 — yet nine years later, it has still not been fully ratified by all EU member states.
According to the Financial Times, only 17 of the 27 countries have completed national ratification. Carney is now explicitly urging the remaining governments to follow.
That is more than an institutional footnote.
Canada and the EU are discussing a new strategic relationship while their existing flagship trade agreement has still not completed the ratification process.
Political resistance remains in individual member states, particularly around agriculture and investment protection.
A “unique alliance” will therefore not create a new transatlantic single market within months.
Europe cannot replace the United States
The scale of the existing economic relationship also matters.
The EU is Canada’s second-largest trading partner, but the gap with the United States remains enormous.
EU-Canada trade in goods and services reached around €130 billion in 2025, an increase of roughly 80 percent from 2016. Goods trade alone amounted to €81.5 billion.
That is substantial.
But with around 70 percent of Canadian exports still heading south of the US border, those flows cannot simply be redirected to Europe.
Automotive manufacturing, energy networks, rail links and industrial supply chains have been built around an integrated North American economy over decades.
Carney’s strategy is therefore better understood not as decoupling from America, but as insurance against excessive dependence on a single partner.
Geopolitical risk could create a new economic corridor for Germany
That is precisely where the opportunity for Germany lies.
Germany itself is looking for ways to reduce its dependence on individual export markets, energy suppliers and sources of critical raw materials.
Canada is pursuing the same objective from the opposite direction.
Ottawa wants to become less dependent on the United States. Europe wants to become less dependent on China — and in some technologies, less dependent on the United States as well.
Those objectives create areas of overlap that were far less urgent only a few years ago: critical minerals, machinery, defense, energy technology, AI infrastructure and industrial investment.
The restructuring of trade is therefore not waiting for a new treaty.
It is already visible in the numbers.
Canadian goods exports to Germany rose by more than a third in 2025, while German shipments to Canada continued to increase. CETA has already removed many market-access barriers. SAFE now connects parts of the two defense industries.
Carney’s »unique alliance« remains a political ambition rather than a fully defined institutional model.
But the economic force behind it is very real.
The uncertainty created by Trump is forcing Canada to diversify its trade relationships. And just as Germany is searching for new sources of raw materials, new markets and strategically reliable partners, one of the largest Western economies is looking more seriously toward Europe.
For German companies, that could prove considerably more important than the diplomatic language suggests.
SK
