Canada will host the 51st Group of Seven (G7) summit in Kananaskis, Alberta, from June 15 to 17, 2025. During last year’s meeting in Italy, G7 leaders issued a declaration stating that members would “remain committed to strengthening the rules-based multilateral trading system.” Since then, G7 countries have faced one of the most challenging geopolitical landscapes since the group’s inception in 1975, primarily due to the trade war the United States has launched on allies and adversaries alike. While a temporary pause of some of the steepest tariffs is in place, the uncertainty surrounding future tariffs means that an economic slowdown, job losses and stalled investments have become the new normal.

Canada has the opportunity to use the G7 as a platform to strengthen trade relationships and call for a renewed commitment to rules-based trade.

Canada’s Presidency

The G7’s presidency rotates annually from member to member, with the presiding nation setting the agenda and hosting the meeting. This year, a time of great uncertainty, Canada is taking the helm. The calendar of ministerial meetings is bare, with only two entries: the G7 Foreign Ministers’ Meeting and the G7 Finance Ministers and Central Bank Governors’ Meeting. During last year’s summit, Italy hosted 23 such meetings. This year, keeping the agenda minimal may be in Canada’s best interest, as trade tensions could usurp any other items.

A Difficult Choice

One item that will weigh heavily on G7 leaders will be the (temporarily cooled) trade war between China and the United States. While the duel between the two superpowers has come to a détente, the potential for re-escalation looms fewer than 90 days away. Likewise, the potential for G7 countries to suffer collateral damage in a trade war between the world’s two largest economies is a source of stress for G7 leaders thanks to their trade dependencies on both countries (see figure 1).

Excluding Canada and Japan, China and the United States capture a fairly even share of imports to G7 countries, but the United States is a larger export market for most G7 countries. For nations around the globe, maintaining a cordial relationship with two squabbling superpowers could become challenging. For two G7 countries, however, the picture is less murky. For Canada, the United States far exceeds China’s influence on the Canadian market. For Japan, the opposite is true. However, other factors ­beyond trade, such as defence and critical minerals, play a role in the relationships countries have with the U.S. and China. The United States is still a clear military superpower and fellow member of NATO with most G7 countries. China is the world’s largest manufacturer and processes almost all of the world’s critical minerals, providing Chinese policymakers with control over critical supply chains.

Figure 1: G7 trade linkages with China and the U.S.: Imports and exports as a per cent of total goods trade (US$)

Source: Government of China’s Customs Department, Office of the United Trade Representative, World Trade Organization.

Canada, Exposed

We need look only to Canada for an example of how difficult balancing these relationships can be. Because Canada followed the United States’ policy of imposing a 100 per cent surtax on Chinese electric vehicles in 2024, China retaliated this March by imposing a 100 per cent tariff on canola and a 25 per cent tariff on seafood and pork, among other exports. Meanwhile, Saskatchewan Premier Scott Moe is pressing Prime Minister Mark Carney to negotiate a reduction in Chinese agri-food tariffs, and Ontario Premier Doug Ford is most concerned with resolving the United States’ auto sector tariffs.

Opportunities for Trade Diversification

Trade diversification has been on Canada’s to-do list for decades but is now more urgent, and this year’s G7 meeting offers an opportunity to shore up new trading relationships. Canada currently has 15 free trade agreements (FTAs) in force with 51 countries (see figure 2 and figure 3). Twelve more free trade agreements are in the negotiation stage, though many of these have not seen any development over the last five years. Meanwhile, Canada is in exploratory talks with China and Turkey but there have not been developments within that same time frame. Finally, negotiations with Indonesia have been concluded. With the Carney government slating trade diversification as a top priority, there is hope that trade discussions will develop into something more concrete.

Figure 3. Free trade agreements by status and country

Note: This figure identifies Canada-European Union Comprehensive Economic and Trade Agreement (CETA) signatories as having FTAs “In force.” CETA will come into full effect when all EU Member States have completed the ratification process. Until then provisional application of CETA will continue.

During this June’s G7 meeting, Canada will have the opportunity to make headway in its talks with the United Kingdom. Currently, a continuity agreement remains in place, meaning the previous FTA applies while a new agreement is negotiated, but trade negotiations have stalled over disputes on agricultural trade. While the United Kingdom was able to reach a trade agreement with the United States, tariffs of 10 per cent remain in place on some goods and will continue indefinitely. It is in both the United Kingdom’s and Canada’s interests to solidify an agreement soon. Canada could also continue pressing France and Italy to ratify the Canada-European Union trade agreement, which remains provisionally in place. There is also significant scope to continue deepening economic and military ties.

Canada’s G7 presidency is also an opportunity to champion the rules-based multilateral trading system, including institutions such as the World Trade Organization. It could also promote trade diversification as a way to strengthen and expand alliances. As Prime Minister Carney recently stated, “If the United States no longer wants to lead, Canada will.” As the G7 in June, Carney will have his first opportunity to do exactly that.