This article originally appeared in the National Post.
By Casey Babb and Meir Klein, March 21, 2025
If you haven’t heard — Canada is in a bit of a predicament with our once closest ally — the United States. Indeed, with President Trump’s unpredictable approach to everything from tariffs to diplomacy — relations between Ottawa and Washington have become historically strained. As a result, many Canadians across the country have become increasingly interested in seeking out alternatives to U.S.-made products and everyday consumer goods. However, if Canada wants to get serious about finding alternatives to the U.S. market, we’ll need to think critically over the long-term about trade diversification and reducing our reliance on the U.S. — not just in terms of the economy, but in other domains like national security, as well. For a variety of reasons, a good place to start this process is with Israel.
When proposing other markets for Canada to deepen and expand trade relations with — it makes sense to think about nations we already do considerable business with — like the United Kingdom, Japan, Germany, and Mexico. But we cannot forget about our greatest ally in the Middle East. After all, the Canada-Israel Free Trade Agreement (CIFTA) has been in place since 1997, and despite its size, Israel is a global powerhouse in key areas like artificial intelligence, cybersecurity, defence, fintech and agri-tech — domains that will no doubt be hugely important for Canada’s economic prosperity, competitiveness, and security over the long-term.
It’s also no secret that innovation in Canada has been underwhelming and that relative to other countries like the U.S. and China, we’re terribly behind when it comes to intangible assets and expertise in areas like cloud computing, data, and algorithms which are driving the global economy. Turning to Israel — a country that has far outpaced most others in these areas — could help turn things around. Unfortunately, though, the CIFTA has not been maximized, and leaders in Canada seem disinterested in deepening relations with Jerusalem.
In 2022, for instance, Canada spent over $400 million dollars on a U.S.-made air defense system for Ukraine which the embattled country only received last year. We aren’t sure if Canadian decision-makers are aware — but Israel knows a thing or two about air defence. Was their technology not for sale? In 2023, Canada committed nearly two billion dollars to procure up to 11 MQ-9B drones from General Atomics Aeronautical Systems — a U.S. company based in California. Was Israel even considered as a potential supplier? Israel’s drone technology is the envy of most other nations in the world — why was this agreement not signed with one of their many suitable companies? In 2024, Canada also signed onto a Technology Safeguards Agreement, enabling the use of U.S. space technology and data for launches in Canada. Again — Israel’s national space agency is pound-for-pound one of the most impressive in the world. Was a potential agreement with them examined? Probably not.
Ultimately, Israel is using its technological prowess and innovative spirit to thrive and quite literally survive in one of the most inhospitable neighbourhoods in the world. For a country roughly the size of New Jersey, they have achieved mind-boggling success in many of the most bleeding-edge domains — allowing them to punch far above their weight. If made-in-Israel technologies are good enough for them — they’re certainly good enough for us.
But expanding trade relations with Israel is about more than dollars and cents, prosperity, and economic diversification in times of crisis. It’s about sending a clear message that leaders in this country stand united and unwavering in their support for Israel in her greatest time of need. It would also make amends for the historically embarrassing decision Canada made in 2024 to halt arms sales to Israel while the country faced a seven-front war of survival. Finally, increased trade with Israel would signal to the antisemitic boycott, divestment, and sanctions movement that their bigoted activities will not take root in this country.
All told — Canada finds itself in the midst of an unprecedented trade war that’s been forced upon us — and while we cannot be sure where our relationship with the U.S. is headed — the power is in our hands to shore up relations with other allies and to make this country all that it can be. Israel is uniquely positioned to help with these things — so let’s get to work.
Casey Babb is a senior fellow at the Macdonald-Laurier Institute’s Center for North American Prosperity and Security, a fellow with the Institute for National Security Studies in Tel Aviv, an associate fellow with the Royal United Services Institute in London, and an advisor with Secure Canada in Toronto.
Meir Klein is the Executive Vice President of the Canada-Israel Chamber of Commerce.
