Canada has embarked on a strategic journey to diversify its trade partners, a move driven by the looming threat of U.S. tariffs and the need for economic resilience. Over the past five years, Canadian exports to members of the Trans-Pacific Partnership have surged by 38 percent, reaching $66 billion. This growth marks a significant shift in Canada's trade dynamics, traditionally dominated by the United States, which still accounts for over three-quarters of Canadian exports. As global markets evolve, Canada seeks to innovate, improve productivity, and invest in better tools to stay competitive.
In recent years, Canada's efforts to explore new markets have borne fruit, as evidenced by the exponential growth of seafood exports to China. These exports have more than tripled over the past decade, now standing at $1.44 billion. Similarly, lentil exports have shown remarkable progress, with annual exports exceeding $2.3 billion. These examples underscore the potential of focused trade initiatives.
Canada's trade landscape is further bolstered by an extensive network of free trade agreements, covering over 50 countries and encompassing two-thirds of the global economy. Notably, Canada recently signed a trade agreement with Ecuador, expanding its reach to approximately 1.5 billion consumers worldwide. The groundwork laid since former President Trump's tariff threats has facilitated Canadian businesses in exploring new markets.
“Instead of waiting for a crisis, let’s make trade diversification the priority it should have been for at least the last decade.” – Tiff Macklem
The urgency to diversify has never been more pronounced. The threat of U.S. tariffs has underscored the vulnerability of Canada's reliance on a single market. Service exports, totaling $208.5 billion in 2023 and including significant contributions from education and travel, have primarily targeted the U.S. market. However, half of these exports remain concentrated in the United States.
Financial services and insurance products represent another promising avenue for Canadian exports. Companies like Manulife Financial and Sun Life Financial are actively expanding their presence in Asia, tapping into the region’s burgeoning middle class. By 2030, Asia's middle class is expected to grow by approximately 1.5 billion people, presenting a lucrative market for Canadian goods and services.
Canada's fishing industry exemplifies the benefits of technological advancements and market diversification. The Inuksuk II, Baffin Fisheries' new $80-metre trawler, stands as Canada's largest fishing vessel, equipped with automated and computerized operations. This innovation reduces the need for multiple boats and minimizes fishing runs, enhancing efficiency.
“With tariffs, or pending tariffs, why would we invest in a market that prices might shoot up 25 per cent overnight when we have no control over it, so all our work could be for nothing,” said Flanagan. “Well, we’ll go there to meet our European buyers.” – Chris Flanagan
Despite challenges in relations with China and India, Canada remains optimistic about untapped potential in these regions without formal trade agreements. The government has also announced an $80 million investment to complete the Churchill export terminal on Hudson Bay, further strengthening Canada's export infrastructure.
“We’ve talked about diversification for a very long time,” said Todd Winterhalt, senior vice-president of international markets at Export Development Canada. “But it feels like we have a moment here to really recognize the benefit to individual companies, and to the broader Canadian economy.”
“The diversification benefit is really in resilience.” – Todd Winterhalt
