Canadian Companies Diversify Trade Due To U.S. Tariff War

Canadian companies are boosting trade with allies beyond the United States and with smaller markets to minimize economic damage from President Donald Trump’s tariffs, government data show, Promit Mukherjee reported for Reuters.

Canadian government data show exports to the U.S. dropped by 10 percentage points to 68% of total exports between May 2024 and May 2025. I Photo: Aluminerie Alouette Facebook

While trade with other markets has helped reduce Canada’s reliance on the U.S.—its largest export destination—economists and consultants say there are limits to how much diversification is possible.

“This is a good thing for Canadian diversification,” said Stuart Bergman, chief economist at Export Development Canada, a government agency.

“It’s also important to mention that we are not looking to replace our U.S. business. That would be crazy.”

Canadian government data show exports to the U.S. dropped by 10 percentage points to 68% of total exports between May 2024 and May 2025. The decline was driven mainly by reductions in manufacturing exports, such as cars and parts, and products made with steel and aluminum.

Prime Minister Mark Carney’s Liberal Party won the April election promising to stand up to Trump and revamp Canada’s economy to be less dependent on its southern neighbor.

Statistics Canada data show that in May, the country increased exports of gold, petroleum, uranium, and pharmaceuticals to close allies such as the United Kingdom and the European Union (EU), and to countries as far away as Australia and Indonesia.

Canada also boosted exports of various commodities to Singapore, Italy, the Netherlands, Indonesia, Australia, Brazil, Germany, and Japan. Trade data showed that from March to May, the UK replaced China as Canada’s second-biggest export market.

Trade with China has slowed amid a renewed trade conflict, with exports of canola and crude oil sharply reduced.

In May, Canada’s gold exports to the UK surged by 473% in value and 312% in volume compared to a year earlier.

However, Bergman noted that bullion exports to the UK—home to the world’s main hub for gold trade—tend to spike during times of crisis and may decline again once uncertainty over U.S. tariffs subsides.