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RBC Thought Leadership Geopolitics, Trade and the Economy Trade Zone: Grappling with yet another critical commodity shortage
Geopolitics, Trade and the Economy
Geopolitics, Trade and the Economy

Trade Zone: Grappling with yet another critical commodity shortage

Plus: A look at Canada’s trade relationship with the EU

An Alliance across the Atlantic 

After hosting some of the world’s largest institutional investors in Toronto, Prime Minister Mark Carney jetted off to address the European Parliament, part of his broader effort to build stronger ties outside the U.S. 

  • Since CETA came into force, trade with the EU has boomed, with the total value of trade reaching more $134 billion in 2025. Canada’s exports to the EU grew 23% annually in 2025 to $43 billion, but the country still has a trade deficit with Europe of around $49 billion. 

  • Canada’s top export to the EU is crude oil, followed by gold, vehicles, other petroleum oils and natural gas.  

  • Within the EU, the Netherlands is the top destination for Canadian merchandise goods, with 22% of trade heading to the Dutch, followed by Germany (21%), France (12%), Italy (9%) and Belgium (9%). All other EU countries represented the remaining 26% of trade.  

  • Quebec is the largest exporter to the EU among Canadian provinces and territories, representing a 32% share of the total, followed by Ontario (27%), the Atlantic provinces (17%), Saskatchewan (9%) and Alberta and B.C. (5%).  

How Canada can help alleviate a sulphur squeeze  

Sulphur prices skyrocketed to record levels in 2026 and remain far above historical norms, putting pressure on fertilizer and crop sectors that need as much as four tonnes of sulphur to make 10 tonnes of finished phosphates, a key fertilizer. 

GMC Trading Group estimates sulphur prices were $874 per metric tonne in June this year, six times the levels seen in 2024.  

Like many commodities, sulphur is being squeezed by shipping disruptions in the Middle East, with alternatives hard to source, supply cannot easily be ramped up to meet demand. Sulphur is largely a byproduct of the oil and gas industry, with Gulf states supplying 50% of globally marine-traded sulphur.  

To shore up its domestic sulphur stocks, China banned exports of sulphuric acid in May, with Russia following suit same on Monday, restricting global supply further.

The squeeze has forced phosphate producers in several regions to curtail production in fertilizer plants, as current sulphur spot prices make operations unprofitable1. If elevated prices continue there could be significantly reduced availability for the key crop nutrient in 2027. 

Canada is a top global sulphur supplier, primarily from oil and gas rich Alberta. Canada exported more than four million tonnes2 in 2025 to over a dozen countries, worth $1.4 billion, up 261% from the previous year3.  

Canada also boasts among the largest sulphur inventories in the world, sitting at around 11 million tonnes. The commodity can be stored cheaply in massive, solid blocks, but moving it requires re-melting and converting to pellets, and transporting long distances with specialized equipment and terminal infrastructure. Exporting costs could add up to more than $150 per tonne, according to Argus4. Capitalizing on the soaring sulphur prices by drawing down on the inventory has therefore been limited, with Alberta’s inventory blocks only changing from 11.4 MT in January to 11.1 MT by the end of July.5 

However, higher prices improve the economics of recovering and removing sulphur that couldn’t be justified before, encouraging more investment. 

— Wilson Fink, Agriculture Policy Lead

The week that was

Trump and Sheinbaum spoke amid trade talks  

  • U.S. President Donald Trump and Mexican President Claudia Sheinbaum discussed a trade deal that remains in the works. A fourth round of formal discussions related to the U.S.-Mexico-Canada Agreement review will take place at the end of the month.   

Canada’s international trade minister went to Asia  

  • Minister Maninder Sidhu travelled to India and the Philippines, where he was set to meet officials and advance trade deal negotiations.  

EU took aim at its trade deficit with China   

  • European Commission President Ursula von der Leyen said the EU “will use all the tools” to rebalance its relationship with China. Europe had a goods trade deficit of €1 billion a day last year.  

U.K. wants in on Brussels’ “Made in Europe” policy  

  • U.K. Chancellor John Healey urged EU finance ministers to design the bloc’s “Made in Europe” industrial policy to include Britain. The two sides have previously clashed over the policies, intended to shield the bloc’s manufacturers from Chinese competition.  

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