Fraser Institute report says China, India are Canada’s best bets to cut US reliance
The report notes that up to 90 percent of the added costs associated with cross-border trade tied to distance stem from factors other than freight, including differences in language, regulation and business practice, costs that don’t disappear even as shipping technology improves.
Despite this structural challenge, the report identifies China and India as standout opportunities. Together, the two countries are expected to account for roughly 45 percent of global economic growth between 2026 and 2030, and both are significant importers of energy and natural resources, sectors where Canada holds a measurable competitive advantage, known in trade economics as revealed comparative advantage.
Where Canada’s advantage lies
The report calculates that Canada’s revealed comparative advantage in merchandise exports sits at 1.11, supporting the view that goods, rather than services, represent the country’s strongest card to play internationally.
Energy products make up the largest share of Canada’s overall merchandise exports at just over 25 percent, followed by metal and non-metallic mineral products, consumer goods, and motor vehicles and parts.
The composition shifts notably when looking specifically at exports to China and India. Farm, fishing and intermediate food products made up roughly 29 percent of Canadian merchandise exports to China in 2024, with metal ores and non-metallic minerals and energy products following closely behind. For India, farm and food products again led at nearly 27 percent, trailed closely by metal ores, forestry products and energy.
