America Is Teaching Its Allies How to Live Without America

 

Canada begins looking beyond the US market as tariffs and political pressure turn economic dependence into a strategic risk.

I had Ken McMullen’s post open on my screen in Karachi when one sentence held my attention longer than the insults around it. He wants Canada to keep diversifying until the United States can no longer use Canadian dependence as a weapon. The real story was not Canadian anger. It was the possibility that America is teaching its allies to live without America.

McMullen writes with fury, sometimes so much that his argument gets buried under it. I kept coming back to the colder part. A great power gains leverage when other countries need its market more than it needs theirs, yet every use of that leverage gives the weaker partner a reason to search for another door. Building that door may take years.

How Allies Learn to Live Without America

North American trade was meant to reduce uncertainty. USMCA entered into force on July 1, 2020, replacing NAFTA after Donald Trump had demanded a renegotiation during his first presidency. Six years later, Washington did not agree to renew the agreement at its first joint review. USTR said on July 1, 2026 that USMCA would remain in force while the parties kept negotiating over American complaints.

I find the timing more important than the diplomatic language. A treaty designed to give businesses predictable rules has entered a period in which its dominant member openly links continuation to fresh concessions. For a Canadian exporter deciding where to build capacity, the legal text still matters, but the political risk now sits beside it. Contracts can survive uncertainty for a while.

Canada has lived with extraordinary exposure to the American market. In 2024, 75.9 percent of Canadian merchandise exports went to the United States; in 2025, that share fell to 71.7 percent. One year does not erase geography. It does show that dependence can move when politics makes concentration expensive.

The movement outside the United States has become visible in broader trade figures. Global Affairs Canada says exports to non-US markets rose 11.1 percent in 2025, while their share of total Canadian exports reached 32.8 percent. The figure marked a four-decade high. I do not read those numbers as proof of Canadian independence; I read them as the first cost entered on America’s geopolitical balance sheet.

A pipeline gives the argument a physical shape. The Trans Mountain Expansion came online in May 2024 and lifted system capacity from 300,000 barrels a day to about 890,000. Oil from Alberta gained a larger route to the Pacific, which means Canadian producers have more room to reach buyers beyond the old continental pattern. Concrete and steel can alter diplomacy long before diplomats admit it.

The United States still buys enormous volumes of Canadian crude. EIA says American crude imports from Canada averaged 3.9 million barrels a day in 2025, making Canada the largest source by far. The dependence cuts both ways, but not equally. A seller with another port has more bargaining room than a seller with only one customer.

Economic Coercion Can Consume Its Own Leverage

Economist Albert Hirschman saw the basic mechanism in 1945. In National Power and the Structure of Foreign Trade, he examined how trade dependence could become an instrument of national power. The stronger state does not need to occupy the weaker one; control over access can create political influence if the weaker economy cannot switch partners without serious pain.

Trump’s tariff politics fits that logic, but it also exposes its weakness. Economic dependence creates leverage while it lasts. If pressure becomes routine, governments begin spending money to create substitutes that once looked inefficient. Security changes the price of efficiency.

I have seen the same instinct in banking, though on a smaller scale. A company that relies on one correspondent bank may tolerate inconvenience for years because changing the relationship costs money and management time. Once that bank starts treating access as a repeated threat, the cost calculation changes fast. Redundancy suddenly stops looking wasteful.

Countries behave in much the same way when the stakes rise. Canada cannot move its economy away from the United States by decree, because factories were built around cross-border production and pipelines still point south. Yet Ottawa does not need full separation to weaken American leverage. It only needs enough alternatives to make the next threat less frightening.

Tariff victories can become strategically expensive. Washington may force a concession because access to the American market remains valuable today. The Canadian firm that absorbs the shock, however, may spend the next five years finding a buyer in Europe or redesigning a route through the Pacific. The next American threat then lands on a different target.

America can win the negotiation and still lose power. I think cautious commentators avoid saying that because American market size remains immense, and the dollar still gives Washington financial reach that Canada cannot match. None of that cancels the mechanism. Power erodes when the threatened party learns how to survive the threat.

The USMCA Review Has Changed the Meaning of Risk

The July review changed the risk. USTR did not extend USMCA for another sixteen-year term, although the agreement continues to operate while talks proceed. For businesses that invested on the assumption of stable North American rules, the message is uncomfortable: treaty access can remain legally intact while political certainty deteriorates.

Canada has already written diversification into government policy. Global Affairs Canada says its current agenda aims to double non-US exports over the next decade. Governments often announce targets that never arrive. The important fact is that Washington’s closest northern partner now treats reduced dependence on the United States as an economic objective worth naming.

From Karachi, I cannot miss the irony. Smaller states have spent decades hearing that deep integration with the American-led economy brings security through rules and access. The bargain worked because American power looked strong enough to enforce the system and restrained enough not to weaponize every advantage inside it. Once restraint disappears, integration begins to resemble exposure.

McMullen’s anger points toward that fear even when his language runs too hot. He argues that Canada should stop allowing the United States to assume permanent access to Canadian resources. I would put the point differently: the more Washington treats dependence as a lever, the more rational it becomes for allies to spend money breaking that dependence. America itself then finances the lesson through the pressure it applies.

The lesson will not produce a clean break. Canada cannot tow Alberta away from the continent, and no European market can reproduce the convenience of a border next door. Geography remains stubborn. Political memory can be stubborn too, especially once boardrooms begin attaching a risk premium to decisions made in Washington.

A future American administration may lower tariffs and speak again about partnership. Some contracts may return quickly. The harder question is what happens after Canadian firms have built new routes, or after governments have learned that concentration carries a strategic price. I keep coming back to that open door on my Karachi screen, not because Canada has already walked through it, but because Washington has given Canada a reason to keep it unlocked.