Since Canada’s decision to join the European Union as an “Associate Member,” we are seeing a historic realignment and a warning that major trading partners are serious about reducing dependence on the United States. As a result, many are asking why this happened, what it means for American companies, and how businesses can navigate it effectively. For decades, the U.S. has been Canada’s closest ally and its largest or second-largest trading partner. That foundation has eroded. Tariff escalations, failed trade negotiations, and sovereignty concerns have pushed Canada toward partners it views as more predictable.
The economic stakes are enormous. In 2025, the US and Canada exchanged more than $880 billion in goods, according to the U.S. Department of Commerce. This includes vehicles, oil, machinery, plastics, and agricultural products. States from North Dakota and West Virginia to Maine and Oklahoma depend on this trade. Any shift in Canada’s orientation reverberates through local economies, supply chains, balance sheets, and the workforce.
With this development, the U.S. historical advantage as an economic superpower has slipped, with material impacts for U.S. and global companies. For 250 years, companies doing business in the U.S. have benefited from strong institutions and norms, including constitutional separation of powers, the rule of law, consistent regulatory mandates, respect for civil liberties, and freedom of the press. As the Atlantic Council’s Freedom and Prosperity Index showed in 2025, strong public governance provides the predictability and confidence needed to spur investment, hiring, and long-term business strategy. This slip in U.S. influence and economic position clearly affects supply and demand, consumer spending, and affordability. It ultimately increases market volatility and affects credit, inflation, risk, and financial solvency.
Business leaders and investors have diverse views on politics, policy, and regulation. But they all depend on stable, sensible institutions and “rules of the game”. Even if they gain from particular decisions, they lose in an environment that is more political and less impartial, more reactive and less strategic. When they cannot count on federal agencies to respect their statutory authority, follow court orders, or issue regulatory rules that mitigate systemic risk or provide widely accessible, trustworthy information, companies lose the stable operating environment they have long depended on. Market volatility rises. Capital is allocated based on popularity rather than long-term value. Credit tightens. Insurance premiums climb. Litigation and reputational risk expand. This materially affects companies’ planned investments in growth and market-positioning strategies. For example, energy companies face uncertainty in planning low-emission investments and risk losing market share if they lag in technology advances. Farmers face increased financial strain as fuel and fertilizer costs rise, driving revenues down. Investors reassess exposure.
In a politically turbulent environment, many companies have already recalibrated their approach to public affairs, generally narrowing their focus to issues directly material to their business. The question now is: Is democratic stability and a secure republic material to business? This is not abstract. As we head into the mid-term elections, companies need to be clear. And the answer is yes. Free, fair, secure, and trusted elections; peaceful transfers of power; impartial law enforcement; predictable tariff authority; and constitutional rights that let employees and goods move freely. These are measurable economic assets. They reduce friction, lower risk, and support growth. They have driven American prosperity and will likely drive your firm's future success.
Once companies recognize this materiality, they can decide how best to act. Businesses are not bystanders in a republic; they are central participants. They can clearly communicate with lawmakers across districts where they operate about their expectation that institutions, rules, elections, and law enforcement are administered fairly and impartially. They can articulate the economic value they deliver: jobs, tax revenue, innovation, and resilience. They can describe the risks that an unpredictable environment, or a system perceived as unfair, creates. What future investments and growth do you envision, and what enables your company to follow through?
The choice is not silence or outrage. There is a third side. It is principled engagement. Companies can restore the stability they rely on by urging elected officials and agency leaders to uphold the foundational institutions and norms that have long supported America’s competitive strength. Often, the business community's voice drives level-headed decision-making and compels officials to preserve order for a thriving economy. A secure republic is not just a civic ideal; it is a material business condition.
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