Canada’s push to deepen commercial ties with the United Arab Emirates is not a peripheral diplomatic exercise — it is a core pillar of one of Ottawa’s most consequential economic strategies of the decade: a deliberate effort to double non-US exports over the next ten years. With the US-Canada trade relationship increasingly unpredictable, the Gulf has emerged as one of the most active fronts in that diversification push.

The Toronto Visit That Signaled Intent

The clearest recent marker came when the UAE’s Minister of Foreign Trade, Dr Thani bin Ahmed Al Zeyoudi, visited Toronto specifically to deepen trade and investment ties with Canada, building on momentum from Canadian Prime Minister Mark Carney’s own prior engagement in the UAE. That visit followed an earlier trip in the opposite direction: Canada’s Minister of International Trade, the Honourable Maninder Sidhu, concluded a Gulf tour in the UAE that produced a concrete slate of commercial announcements rather than mere diplomatic gestures.

Among the outcomes from Sidhu’s visit: a contract between Canadian company Alexa Translations and Al Tamimi & Company to provide AI-powered legal translation services; National Bank of Canada announcing it would open an office in the Dubai International Financial Centre (DIFC); Novisto establishing a new presence in Dubai Silicon Oasis; and Superheat registering a Middle East manufacturing entity in the UAE. Ottawa framed these deals explicitly around Canadian strengths in artificial intelligence, advanced manufacturing, aerospace, energy, financial services, infrastructure, and mining — sectors where Gulf sovereign capital has shown a consistent appetite to co-invest.

Why the UAE, and Why Now

The relationship is not one-directional courtship. Foreign ministers on both sides have kept the diplomatic channel active at a senior level: UAE Deputy Prime Minister and Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan held a direct call with Canada’s Minister of Foreign Affairs, Anita Anand, to discuss bilateral relations and progress on a Comprehensive Economic Partnership Agreement (CEPA) — the same CEPA framework the UAE has used to rapidly expand trade relationships with India, Indonesia, and a growing list of partners since 2022.

For the UAE, Canada represents exactly the kind of partner its CEPA strategy targets: a resource-rich, AI-and-advanced-manufacturing economy actively seeking to reduce dependence on a single trading partner, with deep capital markets and a stable regulatory environment for the sovereign and quasi-sovereign Gulf capital increasingly seeking diversified, dollar-denominated returns outside pure oil-and-gas exposure.

For Canada, the calculation is more urgent. With roughly 150 Canadian companies already maintaining some form of UAE presence and non-oil bilateral trade having grown steadily over the past decade, the UAE offers Ottawa a low-friction entry point into broader Gulf and South Asian trade corridors — the UAE’s re-export economy means goods and services routed through Dubai frequently reach Saudi Arabia, India, and East Africa without additional negotiation.

The DIFC Factor

The choice by National Bank of Canada to establish its Gulf presence specifically within the Dubai International Financial Centre — rather than a mainland UAE license — is itself a signal worth unpacking for finance-sector readers. DIFC’s common-law framework, independent courts, and 100% foreign ownership provisions have made it the default landing zone for North American and European financial institutions seeking Gulf market access without the structuring complexity of mainland UAE entities. National Bank’s move places it alongside a growing roster of North American and European banks that have used DIFC as a bridge into both Gulf sovereign wealth relationships and the broader Middle East, North Africa, and South Asia corridor DIFC is positioning itself to serve.

What Comes Next

CEPA negotiations of this kind typically move through several stages: exploratory scoping talks, formal negotiating rounds, and final ratification — a process that has taken the UAE anywhere from 18 months to several years with other partners, depending on the complexity of the goods and services chapters involved. For Canada, the political incentive to move quickly is significant, given the non-US export doubling target sits on a decade-long clock. For businesses on both sides, the near-term opportunity lies less in waiting for a finalized CEPA text and more in the sector-specific deals — AI, financial services, mining, aerospace — that are already being signed in parallel with the broader negotiation.

The Bottom Line

Canada’s UAE pivot is a case study in how mid-sized, resource-rich economies are responding to a more transactional and unpredictable US trade posture: not by confrontation, but by systematically building alternative capital, trade, and re-export relationships in regions — like the Gulf — that are simultaneously flush with sovereign capital and actively courting exactly this kind of diversified partnership.

Canadian Prime Minister Mark Carney said he and US President Donald Trump have agreed to “intensify” trade negotiations, but the détente followed one of the more jarring tariff threats of the year: a plan for 50% tariffs on a wide range of Canadian imports, framed by Washington as retaliation over the treatment of US-made cars, alcohol, and dairy, according to Al Jazeera’s coverage.

The dependency Carney can’t diversify away quickly

The core problem is arithmetic, not politics. Canada still sends close to 70% of its exports south of the border, compared with roughly 20% of EU exports going to the US, according to Reuters reporting via AOL. To cut merchandise exports to the US by just 10%, Export Development Canada estimates Canada would need to roughly double its exports to China, Germany, France, Mexico, Italy, and India combined — or find markets of similar scale elsewhere.

Carney has nonetheless pushed further than most G7 peers on diversification, becoming the first Canadian prime minister to visit China since 2017 and signing a trade deal with Beijing in January, even as Ottawa shelved earlier ambitions for a comprehensive free trade agreement with China, according to reporting from Automotive News and a separate account of the shelved FTA.

The data is starting to show it — barely

Statistics Canada data shows early, if modest, evidence of the pivot working: exports to the US fell again in May even as businesses sought alternative partners, with the Canadian Chamber of Commerce noting “encouraging gains in other markets,” according to Global News. Carney has also moved to de-escalate on the margins, removing retaliatory tariffs on US goods compliant with CUSMA rules of origin even as broader trade tensions persist.

A domestic political fight over the same question

The diversification strategy is also a live domestic debate. Conservative leader Pierre Poilievre has argued for staying more closely tethered to the US relationship rather than pursuing what critics characterize as an unproven pivot, per the Automotive News analysis. Meanwhile, sector-specific damage from the trade war continues to surface — Algoma Steel laid off roughly 1,000 workers amid the tariff dispute, and food bank usage in Ontario has risen sharply, underscoring the near-term costs of the standoff regardless of its long-term strategic logic.

Why this connects to the broader trade map

Carney’s pivot toward China arrives as the EU pursues its own diversification — striking a Mercosur deal after 25 years of talks, concluding an agreement with Indonesia, and reopening talks with Malaysia, the Philippines, the UAE, and India, according to the same Reuters analysis. Canada’s experiment is effectively a stress test other US-dependent economies are watching closely, including several in the Gulf and Southeast Asia weighing their own exposure to Washington’s tariff unpredictability.

As US tariffs strain CUSMA, Canada is striking deals with China, Indonesia and the UAE. Here’s how Ottawa’s pivot away from the US is actually unfolding.

Every Canadian trade story in 2026 tends to lead with the same character: Washington. But the more consequential story may be what Ottawa is doing everywhere else. Facing sustained US tariff pressure and uncertainty over the CUSMA review, the Carney government has initiated a strategy to diversify Canada’s international trade, with a specific target of doubling exports to non-US markets by 2035.

Canada’s trade diversification strategy aims to double exports to non-US markets by 2035. In 2025–26 it produced a stabilisation deal with China on EVs and canola, a new trade agreement with Indonesia, a Foreign Investment Promotion and Protection Agreement with the UAE, and consultations with India, Thailand and Mercosur.

The deals nobody outside trade-law circles is tracking

Three moves stand out as substantively new rather than aspirational:

• China: during a visit to Beijing, Canada’s prime minister struck a deal establishing a tariff-rate quota for a set number of Chinese EVs — reverting to pre-2024 tariff levels — in exchange for reduced Chinese tariffs on Canadian canola, lobster and peas. This is a live trade-off between EV protectionism and agricultural market access.
• Indonesia: Canada signed a new trade agreement with Indonesia in 2025, opening a Southeast Asian market largely absent from Canadian export strategy until now.
• UAE: Ottawa launched trade-agreement negotiations and signed a new Foreign Investment Promotion and Protection Agreement with the United Arab Emirates, positioning the Gulf as a capital and market-access partner rather than just an energy counterpart.

Meanwhile, exporter confidence has ticked up but remains below its historical average, and diversification remains concentrated in a narrow set of commodities rather than being broad-based.

Why the gravity model is the real obstacle

Trade economists point to the Gravity Model of trade to explain why diversification is structurally hard: the US economy’s size, physical proximity, regulatory similarity and deeply integrated supply chains with Canada make full substitution unrealistic in the near term, even as China and India are flagged as the two most promising long-term markets given they will account for roughly 45% of global economic growth.

The underserved angle

Most coverage treats “Canada diversifying away from the US” as a single narrative. It is actually three distinct, sometimes contradictory tracks: a commodity-for-EV-tariff trade with China, a market-opening play in Southeast Asia via Indonesia, and a capital-and-investment play with the Gulf via the UAE. Each carries different risk profiles — geopolitical risk with China, execution risk with a new Indonesian relationship, and Gulf capital that is itself increasingly redirected toward domestic reconstruction needs amid regional conflict.