Canadian Prime Minister Mark Carney addressed the Canada-India Business Forum in Mumbai, warning that countries relying too heavily on a single dominant power face serious economic risks. The remarks come as Carney pushes for deeper trade ties with India, including a $2.6 billion uranium deal that would supply nuclear fuel to India's expanding energy sector. Carney's pitch is straightforward: in an era of growing protectionism and geopolitical tension, putting all your economic eggs in one basket—especially a superpower that can flip trade policy overnight—is dangerous.

But here's the thing about trade diversification: it sounds great in theory, but it's proven stubbornly hard in practice. A Fraser Institute study on Canada's Indo-Pacific Trade Strategy examined decades of Canadian government attempts to reduce dependence on the U.S. market, going back to Pierre Trudeau's "third option" strategy in the 1970s. The federal government has argued that geographical diversification would reduce the risk of trade protectionist measures by individual trading partners and give Canada a better bargaining position in trade disputes. Yet the U.S. has consistently accounted for approximately 75 per cent of Canada's merchandise exports over the past three decades, despite repeated efforts and trade agreements with Europe and Asia. The research makes clear that political will alone can't overcome basic economic gravity.

Why does geography keep winning? Trade is primarily intra-regional largely because of the importance of physical and cultural distance, and similarities of language, laws, regulations and business practices. Think about what makes a trade relationship actually work on the ground. Companies need reliable shipping routes, compatible legal systems, similar time zones for video calls, and business cultures that speak the same language—literally and figuratively. A Canadian software firm can hop on a morning flight to pitch in New York and be home for dinner. Try doing that with Mumbai. Cultural similarities between Canada and the US make Canadian service exports to the US both more feasible and more economically beneficial than service exports to the Indo-Pacific region. Distance isn't dead, even in the digital age.

That doesn't mean Carney's push is pointless. The uranium deal with India represents exactly the kind of strategic diversification that can work—selling specialized resources to fast-growing markets where Canada has a genuine advantage. And in a world where trade wars can erupt via presidential tweet, having backup options matters. But Carney's real challenge isn't convincing businesses to explore new markets. It's convincing them to fundamentally reshape supply chains and business models when their current U.S.-focused operations work just fine. Countries can't legislate their way out of economic geography. What they can do is make targeted bets on sectors where genuine opportunity exists—and accept that their largest neighbor will probably stay their largest customer.