Energy, ports, and critical minerals emerge as the investable frontline for Canada trade, economists suggest
Each month at BPM, we offer a slate of articles and content pieces that go deep on a particular topic. This month, we're exploring alternatives as an asset class, with a focus on infrastructure in institutional portfolios.
Prime Minister Mark Carney has been crossing the globe at a pace that would exhaust most diplomats, inking trade and investment agreements with several countries, including Ecuador, Qatar, the UAE, and China, with several others to follow.
But for institutional investors, the question is whether this flurry of deal-making amounts to a structural shift or if it's just diplomatic theatre.
Eric Lascelles, chief economist and head of investment strategy research at RBC Global Asset Management, frames the push as a rational response to a deteriorating relationship with Washington.
"As the US has become less accessible and access is somewhat imperiled, there is a great imperative to diversify as much as possible," he said. “In the past, Canada tried to perhaps moralize a little bit as well with some of the deals that it struck and at this point, it's just about finding trading and investment partners. This doesn't seem to be a world in which there are genuine friendships, so much as mutually advantageous opportunities so Canada is seeking those. It's entirely appropriate at a time when the big trading partner has become somewhat less accessible.”
According to Lascelles, the deals have been carefully framed as "strategic partnerships" and "foreign investment promotion and protection agreements" rather than free trade agreements to avoid provoking Washington at a sensitive time. He noted the China agreement, which drew threats of 100 per cent tariffs, was structured to reverse temporary barriers rather than forge new trade access, taking relations back to roughly where they stood in 2024.
Still, he cautions against overstating the impact, particularly as the US accounts for more than 80 percent of Canada's trade, with China a distant second at eight percent.
"Geography is a powerful determinant of trade. And so I think we need to have our expectations realistic in all of this," he said, adding that diversification is welcome, but it likely won’t replace what matters most, which is the outcome of this year's USMCA negotiations.
Randall Bartlett, deputy chief economist with Desjardins Group, also cautious about how much the deals will move the needle for public market investors, noting that equity and fixed income markets in many of the target countries remain small, and the real impact will depend on what each agreement actually permits.
"On the private side, that could be where there's more impact if there's increasing openness for investment in things like infrastructure and real estate," he said.
The more interesting dynamic, in his view, is the two-way flow. Lowering barriers does not just give Canadian pensions access to new markets as it also makes Canada a more attractive destination for global institutional capital. That’s why he sees potential for foreign investors to partner with Canadian funds or take larger direct positions in domestic assets.
Energy is the most obvious sector set to benefit. He points to natural gas and LNG as immediate priorities, alongside major wind projects on the east coast – meaning both conventional and renewable energy stand to attract significant capital.
Mining is close behind as federal and provincial governments have been harmonizing environmental regulations at an increased pace, which he believes will unlock the kind of long-cycle investment that mining demands. Additionally, gold is the key driver of production in Ontario, and with precious metals prices surging, streamlined approvals could accelerate new project timelines for both critical minerals and precious metals.
Pipelines are another area where he expects movement – whether that means reviving Keystone, adding west coast capacity, or developing new export infrastructure at the Port of Churchill for bitumen or LNG. He sees strong appetite for port investment more broadly, particularly where infrastructure can serve a dual purpose by supporting both trade and defence objectives.
That framing ties into Canada's target of five percent of GDP on defence by 2035, noted Bartlett, flagging Churchill, Nunavut, and other northern locations as increasingly relevant as the Northwest Passage becomes more navigable.
On the infrastructure side, he sees a wide range of potential. Ports are a near-term priority, with airports and toll roads possible if regulators ease restrictions that have historically kept institutional capital out. Pipelines and rail also remain core plays tied to energy transportation and export.
Additionally, Bartlett suggests there’s been a structural shift in trade routes, highlighting goods that once came through the US may increasingly arrive directly, and as Canada pivots its exports toward Europe and Asia, maritime infrastructure becomes more critical. That reorientation alone could generate substantial investment across the country's port network, he said.
Meanwhile, Lascelles views Carney’s trade and investment agenda as a clear net positive for Canadian institutional investors, but not a transformative shock. In his view, the new agreements gradually widen the menu of investable opportunities for Canadian capital and should draw some additional foreign money into Canada as new infrastructure and investment projects become viable.
While he acknowledges a theoretical risk that foreign inflows could crowd out domestic investors at the margin, he suggests the more realistic outcome is that the overall project set grows – leaving more for Canadian pensions and other institutions to partner on and, over time, making the economy larger and wealthier.
Lascelles believes the current wave of global trade realignments is fundamentally about countries working around a US‑centred “trade void.” Canada is one of the more energetic participants in that process, which increases the number and direction of both trade and capital flows. Over time, that makes Canada more central in global portfolios. Not only as a resource producer, but also as an issuer of government bonds and a small, secondary reserve currency alongside peers such as Australia.
He stresses that many of the arrangements are deliberately framed through an investment lens rather than pure trade liberalization. Several jurisdictions that were previously off‑limits or very hard for Canadians to access now become selectively investable, especially for direct deals. That matters because both Canada and its new partners in Asia, the Middle East, and potentially South America have large infrastructure gaps to fill, while Canadian pensions specialise in long‑duration, real‑asset investments.
Lascelles believes the benefits for investors are real but incremental, unfolding slowly in an environment where the US continues to dominate Canada’s trade and capital flows.
"I don't think anyone should be holding their breath for massive swings in investment flows," he said.
Bartlett also shares a similar view, noting the challenge, in his view, is scale. Canada is a relatively small jurisdiction, so individual assets may need to be pooled or bundled to attract both domestic and global institutional capital. That packaging could draw in foreign investors alongside Canadian pensions, creating a larger and more liquid opportunity set.
“The Carney government is doing a lot of things right. But the US is our biggest trading partner and probably always will be. So, it's going to be a challenge to diversify that trade, even if we are doing all the right things,” said Bartlett.
