Canada is accelerating a selective move away from the United States by buying less U.S. alcohol and cars and widening its export routes beyond the U.S. On the 21st (local time), the day after U.S. President Donald Trump signaled a 50% tariff on $20 billion (about 29.5 trillion won) worth of Canadian goods, Canada joined the sixth-generation fighter program "Global Combat Air Program (GCAP)," developed by the United Kingdom, Italy and Japan, as the first observer country, according to Canada's CBC and others.
GCAP is not a simple purchase program to pick an already completed fighter and buy it. It is a joint development program that in 2022 merged the "Tempest" pushed by the United Kingdom and Italy with Japan's next-generation fighter F-X development plan. The three countries are working together from airframe design to engines, sensors, electronics, parts production and supply chain building, with a goal of fielding the aircraft in 2035. It is a large-scale project to build a sixth-generation fighter to replace the United Kingdom and Italy's Eurofighter Typhoon and the Japan Air Self-Defense Force's F-2. The defense industry views it less as a program to build a single fighter jet and more as a project to establish a next-generation air combat system that integrates multiple capabilities.
The observer status Canada secured is a position to examine the program's structure before becoming a formal co-developing or purchasing country. It will not buy fighters immediately or share development costs. However, it can review required performance and development timelines, and whether Canadian defense companies can participate in the engine, sensor, software and maintenance supply chains. Canada had been negotiating participation in the project before, but revealed its entry the very next day after Trump's tariff announcement.
Canada has already decided to bring in 88 Lockheed Martin F-35A stealth fighters from the United States. However, it finalized only the first 16 and is reexamining the remaining 72 as relations with the U.S. began to fray. Rather than immediately overturning the F-35 contract, Canada is moving to officially open an alternative option in defense procurement with the United Kingdom, Italy and Japan, and to secure a non-U.S. option in advance.
Canadian consumers began shunning U.S. consumer goods such as American alcohol and American cars after the Trump administration launched a tariff war against the world in May last year.
On the 20th, the United States claimed that Canadian liquor stores removed American alcohol, further opened the market to European Union (EU) dairy products, and applied only tariffs and import quotas to American cars. Provinces and territories across Canada halted sales of American alcohol en masse after March last year. As a result, imports of U.S. liquor plunged 81% in one year, from $718 million to $137 million. The shelves vacated by American alcohol were filled by products from other countries. During the same period, liquor brought in from countries other than the United States increased by more than $170 million. The increase from the EU alone exceeded $100 million. Imports from Chile, Japan, Argentina, Ireland and Australia also rose 13% to 26%. This is taken to mean that boycotts and sales suspensions targeting the United States led to a switch in import sources rather than an overall decline in liquor consumption.
The same trend appeared in the auto market. From April last year to March this year, imports of American cars fell 22%, from $25.9 billion to $20.3 billion. In contrast, imports of Mexican cars rose 23.6%. Mexico accounted for about $2 billion of the $2.85 billion increase in cars coming from countries other than the United States.
After that, the scope of selective decoupling from the U.S. widened through exports and into government-led defense procurement. The United States ran a $46.4 billion (about 68.3 trillion won) goods trade deficit with Canada last year. The U.S. labeled this move discrimination against American goods and pulled out the tariff card again on the 20th. The White House said, "Only China and Canada retaliated against President Trump's tariffs last year." The new tariff measure, which takes effect starting on the 19th of next month, applies to about 5.2% of all goods the United States imported from Canada last year.
Import substitution dovetails with the Canadian government's push to diversify export markets. Last year, Canada's goods and services exports to the U.S. fell by 26.3 billion Canadian dollars (about 2.78 trillion won), while exports to non-U.S. destinations rose by 33.3 billion Canadian dollars (about 3.52 trillion won). The share of non-U.S. markets in total exports reached 32.8%, the highest in 45 years since 1981. The Canadian government is pursuing an expansion project to increase the Port of Vancouver's container handling capacity by 50% as it seeks to double non-U.S. exports by 2035. The project aims to handle new trade worth 100 billion Canadian dollars (about 105 trillion won) annually.
What began as decoupling in the economy has spread to public behavior such as travel and to security policy. Canadians' visits to the United States fell 25.4% year over year to 29.1 million last year. In contrast, Canadians traveling to countries other than the United States increased 9.2%. In a Pew Research Center survey, Canadians who viewed the United States as a trustworthy partner plunged from 83% in 2022 to 35% this year. Canada currently spends about 70% of its weapons procurement budget on U.S. products, but has decided to grow its domestic defense industry so that Canadian firms take over this share in the long term. It also set goals to increase defense research and development investment by 85% over the next 10 years and to boost defense industry sales by more than 240% to create up to 125,000 jobs.
Prime Minister Mark Carney of Canada said on the 21st that the tariff is "a continuation of unilateral U.S. trade measures and a direct violation of the three-country free trade agreement." Carney also said, "This dispute has especially driven up expenses for American households. Canada is prepared to negotiate intensively with the United States to resolve outstanding issues."