Finance Minister Chrystia Freeland has lots of reasons to be losing sleep.

Soaring living costs have Canadians lined up at food banks. The federal Liberals are anticipating a possible recession. And Freeland is personally connected with people living all across war-torn Ukraine.

But in April, the finance minister said there was another looming problem on her mind.

鈥淚f you were to ask what keeps me up at night, I鈥檇 say, 鈥楥hina鈥檚 zero-COVID approach and the very severe lockouts we鈥檙e seeing right now,鈥欌�� Freeland said at an event held by the Canadian Chamber of Commerce.

If Beijing鈥檚 tough COVID-19 rules and factory shutdowns had her the most concerned, it was because these, more than anything else, were sure to wreak havoc on the supply chains Canada relies on to keep its economy running.

In July, Canada dodged what was potentially an even bigger blow when the U.S. broadened a policy that would have significantly advantaged the sale of American-made electric vehicles to instead include its NAFTA partners.

Yet the other problems remain.

Eight months after Freeland鈥檚 comments, China is only now starting to loosen its policy of harsh lockdowns amid citizen uproar, and Russia鈥檚 invasion of Ukraine has kept raising the cost of global commodity prices.

Now, Prime Minister Justin Trudeau鈥檚 government is attempting to strike a tricky balance in managing Canada鈥檚 supply chains, trying to shore up trade with like-minded countries while still taking advantage of China鈥檚 unabated growth.

鈥淭o put it mildly, there鈥檚 a bit of daylight between the two perspectives,鈥� said Michael Manulak, a Carleton University professor with the Norman Paterson School of International Affairs.

Supply chains have gone haywire ever since the World Health Organization declared COVID-19 to be a pandemic in March 2020. Shipping containers were diverted to medical supplies or held unused in far-flung ports. And in the resulting chaos, Canadians saw myriad effects: a semiconductor shortage, a dearth of rental cars, a rise in lumber prices.

A September analysis by Statistics Canada found that companies still haven鈥檛 fully adjusted, with manufacturers reporting that raw materials cost a fifth more this summer than they did the year before.

鈥淏usinesses expect supply chain issues to continue into the short term, specifically when acquiring inputs, products or supplies domestically and abroad, and maintaining inventory levels,鈥� the report said.

Mark Warner, a trade lawyer with expertise in both Canada and the U.S., said the top factor is Beijing鈥檚 lockdown policies, because so many North American goods are assembled using parts made in China.

鈥淚t鈥檚 still coming out of China, so when they slow down, or when they shut down a city or a factory because of COVID, it affects the world,鈥� he said.

As a counterweight, Liberal ministers have said during visits to Washington that they want to emulate America鈥檚 approach of 鈥渇riend-shoring,鈥� which involves diverting trade away from China to allies like South Korea and growing markets in Southeast Asia.

鈥淒emocracies must make a conscious effort to build our supply chains through each other鈥檚 economies,鈥� Freeland said in an October speech.

鈥淔riend-shoring is a historic opportunity 鈥� it can make our economies more resilient, our supply chains true to our most deeply held principles.鈥�

Later that month, Industry Minister Fran莽ois-Philippe Champagne made a similar comment.

鈥淲hat we want is certainly a decoupling, certainly from China and I would say other regimes in the world which don鈥檛 share the same values,鈥� he told a panel.

鈥淧eople want to trade with people who, really, share the same values.鈥�

But Warner said the idea will be tricky to put into force.

Large democracies such as India are no match for China鈥檚 smooth infrastructure and regulatory environment, he said. And Chinese-owned companies operate worldwide, including in Southeast Asia, where Canada is negotiating multiple trade deals as a counterbalance to Beijing.

鈥淚t doesn鈥檛 strike me that autocracy or not-autocracy is going to be the driving force of supply-chain changes. It鈥檚 going to be who we think we can rely on,鈥� Warner said.

Ottawa鈥檚 pitch for friend-shoring goes beyond what Canadians import. And upping its export game could help Canada avoid other snarly supply-chain issues.

The Liberals want to make Canada a powerhouse for electric-vehicle parts, arguing it can mine lithium, cobalt and graphite just as reliably as countries with less-pristine environmental and human-rights records.

Canada already has easy access to nickel, but environmental reviews and Indigenous consultations can tie up access to other critical minerals, an issue that Ottawa is only beginning to tackle.

That leaves companies importing minerals such as cobalt from Congo, despite known human-rights abuses occurring in the country鈥檚 mines.

Business groups have raised similar criticisms about liquefied natural gas, for which Japan and South Korea have a ravenous appetite. Despite that potential, only one export terminal is planned for operation on the West Coast.

The government鈥檚 Indo-Pacific strategy, launched last month, does hint at the need for better supply chains by calling for 鈥渕ajor upgrades to Canada鈥檚 marine, port, airport, road and rail infrastructure, increasing national trading capacity, fluidity and efficiency.鈥�

But there are no clear targets.

鈥淪ome of the government rhetoric in that space has outpaced reality,鈥� Warner said. 鈥淲e have to wait and see to what extent Canada is able to get the permitting done.鈥�

The strategy says Canada must be 鈥渃lear-eyed鈥� about China but put a ringed fence around areas of collaboration and avoid cutting all ties, with Liberals arguing that a balanced trade portfolio could help control the effects of inflation.

Manulak says that diversifying trade in Asia could help Canada鈥檚 relationship with the U.S., which has an outsize importance amid cross-border supply chains and as the government aims to support growing industries such as electric vehicle manufacturing.

鈥淐anada is actually most useful to the United States as an ally and partner 鈥� and has its most leverage in its relationship with the United States 鈥� when we have a well-developed set of relationships that we can call upon,鈥� Manulak said, particularly with countries that are at greater odds with the Americans.

鈥淭hat is what in the longer run makes us a more relevant and influential player in Washington.鈥�

鈥擠ylan Robertson, The Canadian Press