Transcription
It’s the smaller economy. The junior partner. The country that sends three quarters of its exports south across a single border. When President Trump threatened 35% tariffs, everyone assumed Canada would come running. Instead, Canada pivoted. Selling oil to China. Gold to the UK. Striking deals with nations the U.S. barely noticed. So… does Canada actually need the U.S.?
Every day, the U.S. and Canada move billions of dollars in goods. $3.6 billion, to be exact. It’s millions of jobs on the line. Almost 76% of Canada’s exports cross the border. In other words, most Canadian exporters don’t just like the U.S. market… they depend on it.
A large share of trade between the U.S. and Canada is still moving without tariffs. The disagreement isn’t about whether trade continues - it’s about how much of it is truly protected. That protection comes from CUSMA, the trade deal linking Canada, the U.S., and Mexico. But not every product qualifies. Some goods fall through the cracks. And then there are the strategic exceptions critical minerals and energy. Those face much lower tariffs of 10%. Why? Because when it comes to the resources that power American industry, the U.S. may need Canada more than it lets on.
But as the shadow of tariffs loomed, Canada didn’t wait. It moved fast to diversify its trade. At the end of 2024, nearly 76% of Canada’s exports were heading to the U.S. By January 2026, that number had fallen below 68%. So, where did all that trade go? And why does it matter? Exports to non-U.S. nations jumped 15.6% - a record high. Gold to the UK, oil to China… Canada basically told the U.S., “Thanks, but we’ve got other friends now.”
It’s not just about trade tariffs. There’s something else the U.S. can’t afford to lose. Canadian oil. Canada is one of the world’s biggest holders of proven crude reserves Almost 10% of the world’s entire supply. The only countries that have a bigger share are Venezuela and Saudi Arabia. Sure, the U.S. has its own reserves, but they’re tiny compared to Canada’s. And with a population over eight times larger, demand far outstrips domestic supply.
But there’s a bigger problem. U.S. refineries aren’t built for American crude. Not all oil is the same, and much of what the U.S. produces can’t be processed the way its refineries are designed. In the 1970s, lighter crude supplies became harder to find globally. So, U.S. refineries began investing heavily in the equipment needed to handle heavier, dirtier crude. This wasn’t about preference. It was about what was available on the world market, and what could keep U.S. refineries running at full capacity.
Then came 2005. The shale revolution. New technology that unlocked light oil changed everything. But the U.S. refineries were built for heavy oil. Suddenly, all that new light crude wasn’t as useful as you might think. So the U.S. made a choice. Export its newly tapped light oil overseas, and keep refining heavy oil, much of it imported from Canada. Rebuilding the entire U.S. refining system to process light crude would be extremely costly and time-consuming. Something the U.S. couldn’t afford if it wanted to keep fuel flowing.
If Canada decides to take its exports elsewhere… the U.S. is in trouble. It’s left with two options. Import from big heavy oil producers like Russia and Venezuela, which until recently was politically unfeasible. Or… have oil companies spend an astronomical amount to alter their entire refinery system. Even if this investment could be made, there’s yet another problem: U.S. refiners don’t want to do it. As Reuters discovered, U.S. refiners are already facing decreased demand thanks to electric vehicles and international competition. The last thing anyone wants to do is spend billions of dollars in response to political threats and actions that could change a year from now. Experts predict U.S. oil output will plateau by the end of the 2020s. So refineries don’t have much incentive to make expensive long-term investments. Which may be why, even today, Canada is the number one foreign supplier of energy to the United States. To the tune of making up 60% of U.S. oil imports annually. Cutting off this energy supply would be disastrous to the U.S. in the short term. When it comes to energy, the truth is clear: the U.S. needs Canada far more than Canada needs the U.S. The U.S. population is very much powered by Canada.
By January 2026, as Canada was closing in on a trade deal with China, President Trump escalated, threatening 100% tariffs on Canadian imports. If anything, that move backfired. It only made Canada move faster to reduce its reliance on the U.S. There are practical difficulties to doing this, of course. Opening up new export markets doesn’t happen overnight. Shipping goods across the world isn’t like sending them next door. It’s slower, more expensive, and a lot more paperwork.
But what does the US have at stake? Canada is the fifth largest producer of natural gas. And the fourth largest exporter. That means the moment it redirects those exports, the U.S. feels the impact within weeks. It has leverage over global energy markets that few countries can rival. It’s also the fourth largest producer of gold, positioning it to profit enormously as prices hit record highs. In January 2026, gold surged, with analysts projecting it will go past $6,000 an ounce by the end of the year. Sure, the U.S. may be in fifth place, but every country fed up with American trade wars knows exactly where to turn. Even after U.S. tariffs were enacted, Canadian exports went up by 2.1%; mostly on the strength of demand for gold, silver, and platinum.
But it’s not just gold. Canada is sitting on a treasure trove. Potash for farming, uranium for energy, platinum for industry… nickel, cobalt, lithium - basically everything your phone, laptop, and electric car rely on. Every country that wants to stay competitive is eyeing Canada right now. The U.S. acts like its economy can handle anything, but many states wouldn’t be thriving without Canadian trade. A total of 34 U.S. states rely on the Great White North as their number one export market. Particularly those focused on agriculture. Canada and Mexico make up 40% of the market for dairy exports alone.
In early 2025, Canadian imports from the U.S. took a hit, dropping by nearly $3 billion. The hardest-hit industries? Autos, steel and aluminum, electronics… and even agricultural products. U.S. farmers weren’t happy. But Canadian farmers might be. Remember that Canada-China trade deal? Well, the two countries came to an agreement. China lowered tariffs on Canadian agricultural products, including canola seed, from around 85% combined to 15%. In return, Canada will open up its market to Chinese electric vehicles, and the two countries will cooperate and coinvest in new tech and green energy. Canadian Prime Minister Mark Carney expects that lower tariffs will increase export orders for Canadian businesses by $3 billion. Carney also set a goal to increase Canadian exports to China by 50% by 2030.
But all this doesn’t even touch on a much more existential problem that would occur if the U.S. and Canada severed ties. Their mutual defense. If you’re still here, I must be doing something right. Make sure to hit like and subscribe to see how the world really works.
Canada and the U.S. share the world’s largest unmilitarized border. Over 5,500 miles (8,851 km). It had never been a problem before. The close U.S.-Canada relationship meant nobody worried about fences or border patrols across the Great Lakes. According to a recent poll conducted by Leger, nearly a third of Canadians believe that the U.S. will try to invade them. Suddenly that unsecured border has started to look… unsettling. Putting up patrols across miles of dense forests and endless lakes? That wouldn’t be easy.
But would Canada be isolated without U.S. protection? Not really. Canada isn’t alone. It’s part of NATO. Any conflict wouldn’t just be bilateral, it would ripple outward. There are 32 countries in NATO, including the U.S. But the United States accounts for roughly two-thirds of the alliance’s total defense spending. Its military budget dwarfs everyone else’s. That said, the gap is slowly narrowing. Since 2020, U.S. defense spending as a share of its economy has edged down, from 3.6% to 3.2%. Meanwhile, the rest of NATO has been ramping up, from 1.7% to 2.3%. By 2035, Canada wants to spend $150 billion on defense each year. Could they actually defend themselves without the U.S.? That’s the question everyone’s asking.
Nearly half of everything the world spends on its militaries comes from one country. In 2026, the U.S. military budget stands at roughly $900 billion. It’s a terrifying figure for any country that might find itself on the wrong side of a super power. And Canada has that superpower right on its doorstep. Canada would obviously prefer to have that firepower on its side. But it’s hard to imagine the American public backing a war against its own northern neighbor anytime soon. A Research Co. survey found that 66% of Americans would prefer Canada to remain independent. For now, neither side wants to find out what happens when the other stops picking up the phone.
The trade wars, the energy disputes, the military flexing… they all matter. But that’s just the surface. There’s one factor that puts the U.S. in a position it can’t afford to ignore. One thing that makes Canada indispensable in ways people didn’t even think… NORAD. Its purpose is to “prevent air attacks against North America, safeguard the sovereign airspaces of the United States and Canada… and provide aerospace and maritime warning for North America.” With the U.S. not exactly being on a “how to make friends and influence people” crusade lately - and China quietly building up its military - the need for NORAD has never been higher since the Cold War ended. And where is it needed most? Canada’s Arctic.
Being part of NORAD greatly helps Canada as well. Both the U.S. President and Canadian Prime Minister are considered its leaders; they can both issue commands. And it bolsters both nations’ securities. As defense analyst Andrea Charron, puts it “the fact that NORAD exists is a deterrent to adversaries.” It’s telling that NORAD is one of the few international alliances the new U.S. administration hasn’t threatened. Even a single statement linking Canada’s F-35 purchases to NORAD caused a stir. When U.S. Ambassador Peter Hoekstra hinted at it, the State Department quickly backtracked, insisting NORAD’s existence was never in question. The message is clear. No matter the trade fights or political tension, some partnerships remain untouchable. That’s just how important NORAD seems to be to the United States. And why they might not want to push Canada too much.
Why is the Arctic high on everyone’s shopping list? Minerals, shipping lanes, military access… everything intersects here. In May 2024, the Pentagon invested CA$8.74 million in the NICO cobalt-gold-bismuth-copper project in Canada’s Northwest Territories. These rare minerals are the backbone of next-generation military hardware. The Pentagon saw a global supply chain crisis coming, and they started aggressively buying up the physical raw materials to survive it. Canada, wanting to secure its status as an indispensable defense partner to the United States, invested CA$7.5 million. It wasn't a standard mining investment. It was a national security bailout.
But it’s not just about resources. It’s about geography. Russia and China are both turning their attention north. Arctic ice is melting fast. In parts of Canada, up to four times faster than the global average. As the ice retreats, new shipping lanes open. Untapped resources become accessible. And suddenly, the top of the world doesn’t look so remote anymore. It looks strategic. Russia isn’t sitting still. It’s been expanding military bases and resource projects across the Arctic. It already controls roughly half of the land and maritime territory north of the Arctic Circle and dominates much of the region’s economic activity. China is watching closely. It has been mapping Canada’s Arctic, and has openly stated its ambition to one day send cargo ships through the Northwest Passage. And that may not be science fiction for long. Experts predict key Arctic routes could be ice-free during summer months as early as the 2030s. The current U.S. administration has repeatedly expressed their interest in securing Greenland, claiming it’s “necessary” for their security interests.
If Canada decides to break their alliance the U.S. loses access to a large portion of the Arctic. But if the U.S. decides to pull back on defending Canada, they can’t help protect the Arctic territories they now deem crucial for U.S. future interests either. Canadian Prime Minister Mark Carney knows just how critical the Deep North is—for Canada and the world. He’s launched an unprecedented plan to build mines, ports, highways, and military infrastructure across the Northwest Territories. And when I say sparsely populated, I mean it. The Northwest Territories are about the size of California and Texas combined. Yet only 42,000 people live there. Securing a region that vast is no small feat. That's where Carney's plan comes in - a chain of mines, ports, highways, and military installations stretching across the entire Canadian north. It would link remote communities, boost economic development, and strengthen military presence in the region. The plan also reaches Nunavut and Yukon. In November 2025, the Canadian government unveiled a budget that included $1 billion Canadian dollars spent over the next 4 years on major transportation projects in the north alone. For the first time, regional politicians in the north see that the federal government is paying attention to them. The political will appears to finally be there. And much of it is driven by pressure from the south. U.S. threats and trade tensions have pushed Canada to fast-track its plan to reduce dependence on its neighbor.
This isn’t about Canada versus the U.S., but about how modern countries mistake convenience for dependence. Canada and the U.S. severing ties, or more realistically, having a friendship cooldown, would cause big financial and geopolitical headaches for both. But they would be survivable. Imagine the U.S. buying emergency oil from Venezuela’s depleted fields just to keep the lights on while Canadian supply gets rerouted to Beijing instead of Kansas. Canada needs the U.S market. The US needs Canadian oil. And both need the Arctic not to fall into the wrong hands. That's not a trade relationship. That's a mutual dependency neither side can afford to admit out loud. If staying friends starts to cost too much, the price of going its own way might suddenly seem worth it. Thanks for joining me today. I hope you enjoyed the video, and if you want to see more videos like this, then please consider subscribing and turn on notifications. It really does make a difference. Thanks again, and I'll see you next time on Map Pack.