The Impact of US Tariffs on Canada’s Economy, an end of a Trade Catholic Marriage. What is next?
Omar Abbasi
Senior Trade Commission Officer - Defense, clean technologies, ICT and creative industries at Embassy of Canada
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The Impact of US Tariffs on Canada’s Economy, an end of a trade catholic marriage. What is next?
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The Impact of US Tariffs on Canada’s Economy: A Shift in Trade Dynamics
Canada has long depended on the United States as a crucial partner in its economic landscape. In fact, 75% of Canada's total exports go to the US—a figure that has recently hit its lowest point. As the US imposes tariffs and other changes disrupt the trade relationship, it’s time for Canada to take a step back, not just to renegotiate with the US, but to rethink its overall export strategy.
While the proximity of the United States and its massive consumer market have historically made it the perfect partner for Canada, changing political dynamics and economic shifts, both in the US and Canada, demand a broader perspective on Canada’s future trade.
It’s clear that Global Affairs Canada (GAC) has played a vital role in pushing Canadian companies into international markets through the Trade Commissioner Service and CanExport. However, these efforts alone aren't enough—Canadian companies need to be proactive in exploring these new markets.
In the short term, US tariffs will undoubtedly have a significant impact, driving up prices for American consumers who may seek more cost-effective options. But this also serves as a wake-up call: Canada must diversify its export revenue streams. One way to do this is by expanding trade in regions like Asia and the Middle East, where economic growth is strong. GAC could support this shift by establishing trade hubs to promote Canadian exports in these thriving regions.
In this article, I aim to shift the conversation from panic over tariffs to considering viable alternatives. The US still remains a major trading partner, with Canada exporting a record $439.6 billion to the US in 2023. But the Middle East, with its growing market potential, is an opportunity worth exploring.
Let’s take a closer look at some key Middle Eastern countries, specifically Saudi Arabia, the United Arab Emirates, Egypt, Kuwait, Oman, and Qatar, to see how they align with Canadian capabilities across sectors like industrial machinery, pharmaceuticals, oil, and plastics. Here’s a snapshot of potential imports from these countries:
?Total Industrial Machinery Imports USD
Total Pharmaceutical Imports USD (not including other healthcare offerings)
Total Oil & Mineral Fuels Imports USD
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Total Plastic Imports USD
The above four sectors are valued in total at $ 156 Billion. The question that I am embarrassed to answer is what Canada’s market share in each sector is. We haven’t tapped into the Clean Tech/Renewable Energy sector, automotive, FMCG, mining nor agricultural products yet!! - Yes we do export in most of these sectors (shyly compared to other G7), but we have a lot of opportunities to grow and have a strong market share.
This is just a glimpse of what is possible in terms of exports from Canada to the Middle East. Additionally, the education sector, which directly contributes to the Canadian economy (education, housing, insurance, automotive, food, healthcare, consumable products, apparels …etc) is seeing challenges due to new visa quotas, but still presents an untapped opportunity.
Another critical area to focus on is the defense sector*, where countries in the Middle East are among the top five defense spenders globally. Below are the 2025 defense budgets for key players in the region:
2025 Defense Budget
*Canadian companies need to work with the government to address export controls to this region, as they may hinder competitiveness.
In conclusion, both the Canadian government and the private sector need to align efforts to diversify export markets. The government must position Canada as a preferred trade partner for countries experiencing growth, while companies must develop a strategic, patient approach to international expansion. Results may take time, but long-term success will be achievable through commitment and collaboration.
Key Takeaways for Expanding to International Markets:
By adopting a proactive and diversified approach, Canada can navigate the challenges posed by US tariffs and position itself for success in new, high-potential markets.
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*This article reflects my own opinion based on my experience in the Middle East region and North America
#Canada #trade #exports #imports #unitedstates #US #bilateraltrade #strategy #expansion
#defense #pharmaceutical #healthcare #industrial #economy #tarrifs #trump #politics
Senior Trade Commission Officer - Defense, clean technologies, ICT and creative industries at Embassy of Canada
1 个月Christyn (Chris) Cianfarani?your thoughts on this please as we have to sit and talk during DSEI, too bad I won’t see you at idex?
Board Member | Strategic Management Executive | Driving Business Transformation & Sustainable Growth | Expert in M&A, P&L Management, and Global Business Development
1 个月Thanks Omar for pointing out the opportunities in the global markets for Canadian products. High time now that our International Trade Offices / Officers get active and make this a "top priority" to help Canadian companies realize their potential. Upcoming Gulfood in Dubai will be a perfect venue to kick-start our concerted efforts on war footing.
Entrepreneur | Author of "The Streaming Media Handbook" | Streaming Technology Expert
1 个月US tariffs highlight the need for Canada to expand exports to high-potential markets like the Middle East and Asia. With $156B in trade opportunities across key sectors, Canadian companies must proactively engage in strategic, government-supported global expansion to ensure long-term growth and resilience.