This week in Voice of Business, we are diving into trade expansion and the need to diversify Canada’s trade amid an ongoing tariff war. Now, more than ever, it is crucial to explore new trade partners. With internal trade barriers coming down and more reductions expected, Canadian businesses are looking for ways to expand beyond our traditional reliance on the United States.

Locally, the reality is that the U.S. remains Ontario’s largest trading partner, accounting for over 81% of our exports and supplying 52% of our imports. Given this deep economic relationship, shifting trade beyond North America is no simple task. It involves numerous hurdles, including regulatory challenges, financial risks, costly investments, and market uncertainty. In this article, we explore the key considerations for expanding trade and the role government can play in supporting businesses as they navigate global markets.

The first step in diversifying Canada’s trade is providing businesses with the resources and opportunities to branch out. Trade missions are an effective way to connect Canadian businesses with international markets, helping them reach a global audience. These missions facilitate networking with senior officials and key industry players, creating opportunities to diversify exports and establish a presence in foreign markets. Canada must commit to supporting key industries impacted by tariffs to mitigate potential consequences if another trade war arises.

One upcoming opportunity is the Team Canada Trade Mission to Thailand and Cambodia at the end of May. Click here to find out more about how this trade mission could benefit your business.

Trade agreements are another powerful tool for businesses exploring international markets. Canada currently has 16 free trade agreements (FTAs), with Ecuador recently initiating discussions for a new agreement. FTAs help lower trade barriers, streamline regulations, and create easier pathways for businesses to expand. While moving operations or sales to another country may not fully offset the costs of U.S. tariffs, establishing a presence in alternative markets can help mitigate future trade risks.

Despite the benefits, expanding into new markets comes with challenges. Businesses must navigate language barriers, cultural differences, and varying regulatory frameworks. Researching international markets and understanding cultural norms are critical steps in ensuring a product or service aligns with local consumer expectations.
Small and medium-sized enterprises (SMEs) face additional obstacles, such as high shipping costs, fluctuating foreign exchange rates, and complex compliance requirements. Unlike large corporations, SMEs may lack the resources to absorb these costs, making international expansion a more daunting endeavor.

While businesses must take the lead in establishing themselves in new markets, there are valuable resources available to ease the transition. The Trade Commissioner Service (TCS) provides support in over 160 cities worldwide, helping businesses navigate foreign markets and connect with global partners.

While expanding internationally cannot fully replace Canada’s deep trade ties with the U.S., it is an important strategy for reducing long-term risks. By leveraging government support, trade agreements, and market intelligence, Canadian businesses can build resilience and unlock new growth opportunities.
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The time to act is now—Canadian businesses must look beyond our southern neighbor to secure a more stable and diverse economic future.

This week on Voice of Business, we are discussing the impact of tariffs and what has happened since their implementation. Tariffs came into effect on March 4th, and we recently hosted a well-rounded panel with industry experts to examine their effects. This week, we will explore how the Canadian government has responded and what it means for businesses.

March has been a volatile and concerning month for our members and local businesses. As of March 4th, at 12:01 AM, U.S. tariffs took effect due to Canada’s perceived inaction on Fentanyl-related concerns. In response, the Canadian government responded with counter-tariffs on $30 billion worth of goods. If U.S. tariffs remain in place, total Canadian countermeasures could increase to $125 billion, totaling $155 million in tariffs on U.S. imports. The affected products such as electric vehicles, fruits, vegetables, beef, pork, dairy, electronics, steel, aluminum, trucks, and buses. Currently, the list of affected goods includes orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and certain pulp and paper products.

On March 6th, the U.S. announced that CUSMA-related products, including auto parts, would be exempt from tariffs until April 2nd. Canadian officials later confirmed that approximately 40% of Canadian exports to the U.S. would be exempt and that Canada would not proceed with the second wave of $125 billion in tariffs until April 2nd. Despite Canada appointing a Fentanyl Czar and increasing border security measures, these efforts have not been sufficient to prevent U.S. tariffs.

With $3.6 billion in goods and services crossing the border daily, these tariffs will have a substantial impact on jobs, industries, and local businesses. The effects are already being felt. Businesses exporting products to the U.S. are experiencing financial strain, with some anticipating layoffs and price increases to offset rising costs. Supply chain disruptions are also expected, as importers of affected goods will face higher prices. Consumers will bear the burden through increased costs at checkout. The Canadian Chamber of Commerce (CCC) has been actively advocating for the removal of U.S. tariffs, estimating that their economic impact on every Canadian will be approximately $1,900. Canada remains the number one trading partner for 34 U.S. states, highlighting the deeply integrated nature of the supply chain. In Ontario alone, nearly one million Canadian jobs depend on Ontario’s U.S. exports, and 19,927 companies export to the U.S. These tariffs will create logistical and financial challenges, particularly for industries such as homebuilding, which rely on American products and will be forced to pass price increases onto consumers. Given the deeply integrated trade relationship between Canada and the U.S., supporting millions of jobs in both countries, it is clear that continued tariffs would cause significant economic damage
Despite the challenges, there is some hope. Last week, Community Futures and the local Chamber of Commerce hosted a Tariff Panel discussion featuring industry experts.
Some Key takeaways from the panel included:

• the importance of businesses connecting with provincial and regional Chambers of Commerce to explore new markets.
•  Panelists emphasized the urgent need for interprovincial trade reform to increase cross-border trade within Canada. Businesses were encouraged to participate in global trade missions with the government to diversify export markets.
• Expanding port infrastructure was identified as a crucial step to improving trade efficiency.
•  Additionally, the panel highlighted that the U.S. may underestimate Canada’s leverage, particularly in sectors like agriculture, where Canada produces 90% of the world’s potash, a critical resource for American farmers.

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Although the trade war is beyond our control, recognizing these opportunities provides a sense of optimism. Canada is more unified than ever in its approach to economic resilience. Municipal governments are taking action, with both Peterborough County and the City of Peterborough committing to a “Made in Canada” procurement strategy to ensure local spending benefits local businesses.

The Canadian government has also introduced several measures to support businesses affected by tariffs:

• The Trade Impact Program, launched through Export Development Canada, will deploy $5 billion over two years to help exporters reach new markets, navigate economic challenges, and address issues such as currency fluctuations and cash flow shortages.
• Additionally, $500 million in favorable loans will be available through the Business Development Bank of Canada to support impacted businesses and their supply chains, along with advisory services on financial management and market diversification.
•  Providing $1 billion in new financing through Farm Credit Canada to assist the agriculture and food industry with cash flow challenges, helping businesses adapt to changing market conditions.

If your business is struggling with these challenges, please visit our Tariff Resources page for contact points and assistance. The situation is evolving rapidly, and while the future remains uncertain, it is crucial that the Canadian government continues to develop strategies to support businesses through this difficult time.