Canada’s Push to Diversify Trade Away From U.S. Seeing Mixed Results: Report

Why It Matters

Diversifying trade reduces Canada’s exposure to U.S. tariff shocks and supports regional economic resilience, making the uneven progress a critical policy concern.

Key Takeaways

• Calgary and Ottawa‑Gatineau led with ~64% export diversification gains
• Nationwide non‑U.S. exports rose 16.8% in 2025
• Only 6% more Canadian firms sold abroad year‑over‑year
• Manufacturing hubs like Oshawa remain heavily US‑dependent, showing stress
• Government aims to double non‑U.S. exports, requiring broader SME participation

Pulse Analysis

Canada’s trade strategy has long centered on its deep economic ties with the United States, but rising tariff pressures have forced policymakers to look beyond the border. The latest Chamber of Commerce analysis reveals that while the country’s total non‑U.S. goods and services exports grew by roughly $33 billion CAD (about $24 billion USD) in 2025, the expansion is concentrated in a handful of cities. Calgary and Ottawa‑Gatineau surged ahead, each posting over 60% growth in non‑U.S. shipments, driven largely by established exporters extending their reach into Europe and Asia.

The report highlights a stark regional divide. Cities with strong manufacturing bases—Oshawa, London, and the Kitchener‑Cambridge‑Waterloo corridor—remain tethered to U.S. demand, showing signs of economic stress as diversification lags. In contrast, Toronto, Saskatoon and Kelowna have managed modest double‑digit gains, but the overall increase in the number of firms exporting abroad is a modest 6%. This suggests that growth is coming from deepening existing relationships rather than cultivating new market entrants, leaving many small and medium‑sized enterprises (SMEs) still focused on local sales.

For Canada to meet its ambition of doubling non‑U.S. exports over the next decade, policymakers must incentivize broader SME participation and reduce reliance on a single market. Strategies could include export financing, trade missions to emerging economies, and targeted support for sectors with high diversification potential. As global trade becomes more fragmented, building a resilient, multi‑market export base will be essential for maintaining competitiveness and cushioning regional economies from future U.S. policy shocks.