On September 16, European Commission President Ursula von der Leyen opened the door to Canada becoming the European Union’s first “associate member.” Canadian Prime Minister Mark Carney welcomed the proposal the following day before the European Parliament, calling for a much deeper economic relationship with Europe. The legal meaning of associate membership remains to be defined, but the direction is clear. Brussels and Ottawa are discussing deeper integration in a wide array of sectors, including critical minerals, defence, energy and advanced technologies.
The speed of this rapprochement is an important signal of what an increasingly unpredictable United States is producing among its closest allies. Canada remains deeply integrated with the American economy and security architecture. Yet repeated tariff disputes and uncertainty over the future of the bilateral relationship have strengthened Ottawa’s incentive to build alternatives. The government has explicitly set a goal of doubling non–US exports and describes diversification as a way of reducing Canada’s dependence on a single trading partner.
Europe is an obvious choice. The 2016 Comprehensive Agreement (CETA), though not fully ratified, already provides much of the framework, while EU–Canada trade in goods and services exceeded €130 billion in 2025. Canada also became the first non-European country to participate in the EU’s SAFE defence procurement instrument this year, building on the Security and Defence Partnership signed in 2025.
For Italy, this shift deserves particular attention. Trade between the two countries remains relatively modest compared with Italy’s largest commercial relationships, but it is growing quickly. Bilateral merchandise trade reached €11 billion in 2025, up almost 78 percent from 2016, before CETA entered into provisional application. Canadian imports from Italy reached €8.5 billion in 2025, while Canadian exports to Italy rose to €2.4 billion. Italy is already Canada’s second largest source of imports from Europe after Germany.
- Although the volumes are small, Canada plays a significant role in Italian food security. In 2024, Italy imported almost 1.2 million tons of wheat from Canada, worth roughly $449 million. Ottawa was the largest foreign supplier of durum wheat to Italy, shipping around 775,000 tons. Canadian government figures indicate that Italy remained one of the leading destinations for Canadian durum during the 2025 to 2026 crop year, receiving around one million tons by May. For a country whose food industry is such a central part of its international brand, this is a strategic connection.
Critical minerals are another. Canada identifies 34 minerals and metals as critical and possesses significant resources in graphite, lithium and nickel, alongside rare earth elements and uranium. Italy has already started positioning itself within this ecosystem. Eni recently committed almost €62 million to procure Canadian graphite from Nouveau Monde Graphite’s Matawinie mine in Québec. Rome has also joined the G7 Critical Minerals Production Alliance, while Prime Ministers Carney and Giorgia Meloni have discussed Italian cooperation with Canada on critical mineral stockpiles.
- This is particularly relevant as Italy develops its own strategy for critical raw materials. Canadian resources can complement Italian capabilities in processing and advanced manufacturing, creating space for partnerships across the value chain.
Canada also offers an important advantage for companies considering long term investments in strategic supply chains. Projects involving mines, processing facilities and industrial infrastructure require large amounts of capital over long periods. Canada offers an established commercial legal system and a predictable regulatory environment, alongside an existing free trade framework with Europe. For Italian companies assessing access to critical resources abroad, these conditions can make industrial integration easier than in many resource rich emerging markets where regulatory uncertainty or weaker institutions can increase project risk.
The opportunity also runs in the other direction. Italy’s exports to Canada are concentrated in areas where deeper European integration could create additional demand. Pharmaceuticals have expanded strongly, while electrical equipment recorded particularly rapid growth in 2025. Machinery remains a major Italian export sector despite a recent decline. The Italian government’s own export strategy identifies food and machinery among the priority sectors for Canada.
Defence could become increasingly important as well. Canada’s entry into SAFE allows Canadian companies and products to participate in the EU’s new defence procurement framework. Existing bilateral cooperation between Italy and Canada already covers industrial and technological collaboration, creating a foundation on which Italian defence companies and specialized suppliers can build.
There is also a less visible institutional advantage. Canada is a member of Five Eyes, the intelligence partnership connecting it with the United States, the United Kingdom, Australia and New Zealand. While the alliance has been strained since 2025 under the new US administration, some aspects relevant to business endure. The five countries have developed common guidance for technology companies and investors on protecting emerging technologies from state threats, an effort that began in British agencies, and Canada can keep working on it with its other three partners independent of Washington policies.
- Closer European ties with Canada could therefore provide another bridge between European industrial policy and Five Eyes countries’ security practices. For Italian firms operating in defence or critical infrastructure, exposure to these standards can matter commercially as governments place greater weight on trusted suppliers and technology security.
- Germany provides another indication of what deeper integration could produce. Canadian exports to Germany reached €5.7 billion in 2025, rising by more than a third in a single year, while Canada imported €25.1 billion in German goods. The relationship is particularly strong in industrial machinery and automotive products. Italian companies already embedded in German value chains could benefit indirectly as Canadian European industrial integration deepens.
Canada’s position inside the North American economy offers European companies a possible way into American value chains. Relations between Ottawa and Washington have been strained by another tariff escalation, but the Canada-US-Mexico Trade Agreement (CUSMA) provides a better baseline to return to, rather than current EU-US rules. For European companies concerned about future trade friction with Washington, a Canadian presence may therefore still provide access to supply chains deeply integrated with the United States.
This matters for Italian industrial groups already accustomed to operating through international value chains. A Canadian investment can serve the Canadian market while creating additional options for companies seeking a larger American footprint. As trade policy becomes harder to predict, having more than one point of entry into the region can carry strategic value.
There is, however, an important caveat. Canada’s European opening is part of a broader, more assertive and pragmatic diversification strategy.
- In January, Mark Carney became the first Canadian prime minister to visit China since 2017, launching a new economic roadmap that included lower barriers for selected Chinese electric vehicles and improved access for Canadian agricultural exports, potentially endangering the niche currently occupied by Italian suppliers. Ottawa is clearly seeking greater room for maneuver across Europe, China and the United States.
Italian companies should read Canada through this lens. The opportunity is real, but so is the need to understand how fast Ottawa’s external relationships are evolving. For firms looking at the Canadian market, political analysis is becoming as important as commercial analysis.
- Canada offers access to critical raw materials, a stable legal environment and deeper links with Europe. The companies best placed to benefit will be those that will be able to understand how far Canadian policy and capital are willing to go.
