At a time when the global economic order is in flux, Canada is one of the loudest proponents of building international relationships via trade. For trade-impacted companies, it means some degree of certainty in an increasingly uncertain world.
How would we sum up this commitment to trade?
“Canada values the rules-based system. We respect trade agreements and the rule of law… We believe in the value of the free exchange of goods, capital and ideas,” said Prime Minister Mark Carney, in a recent Canadian Broadcasting Corporation (CBC) article.
Not only does this commitment to our trade agreements match with our long history of supporting an international order based on shared values and rules, but it is a core Canadian strategy for economic growth. In the Prime Minister’s words, “forging new partnerships abroad” is a fundamental priority for Canada’s current government.
In reaction to the new trade strategies being employed by the United States, Canada has certainly put greater effort into developing more and deeper relationships with countries around the world, but we’re also building on a truly impressive foundation of trade agreements forged over the last decade.
The numbers are almost jarring – trade agreements with 50+ countries that are home to 1.5 billion consumers, representing 61% of the global economy. Canada is #1 in trade connections with G7 countries.
It’s Canada’s status as a free trade nation that continues to make it an appealing place for new manufacturing investment.
Access to America
Let’s start with the elephant in the room: the United States.
The fact is that despite all of the bluster, there is still a wide-ranging trade agreement in place, and many of the goods covered by this agreement remain exempt from tariffs. As a result, trade between the United States and Canada has remained strong.
It’s true – thus far in 2025, in the face of major uncertainty and exceptionally challenging policy, the United States has still imported more than $259 billion in goods from Canada. There are also reasons to believe that these new tariff policies may not survive long after the Trump Administration, with the US Senate recently voting to rescind most Canadian tariffs and the vast majority of Americans believing the tariffs are hurting their economy.
For businesses, this means that Canada not only continues to provide access to the American market – so long as rules of origin are satisfied – but that there’s an overwhelming appetite in the United States to retain this significant economic partnership. The rhetoric of the last year shouldn’t be enough to prevent a capital-intensive manufacturing investment from landing here.
It isn’t just about America
Yes, our trade relationship with the United States is the headline for any trade-exposed country. But, you might ask, why not just locate in the United States then?
Canada has a pretty significant advantage over the United States: other notable multi-lateral trade agreements. And this isn’t likely to change any time soon, either, with the current American policy focused on bilateral agreements.
One of Canada’s current trade agreements is with the European Union, which is one of the world’s largest economic blocs, accounting for approximately one-sixth of global economic output. The agreement removes 98% of the pre-existing tariffs between Canada and the EU. In practice, the exports from Canada to the EU are small relative to USMCA – just $30 billion in 2024 – but the market access is still very lucrative in some industries, especially those producing manufacturing machinery, nuclear components, aircraft components and pharmaceuticals.
The other major agreement is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP for short. After playing a key role throughout negotiations, the United States abandoned the agreement at the last minute, leaving twelve signatories that still represent about 15% of the global economy. This includes significant economies like Japan, Singapore, Vietnam and the United Kingdom.
For manufacturers looking to access a global market, there’s literally no better place to grow than Canada. From this country you have access to the United States, the EU, the United Kingdom, Japan and more – something you simply can’t get anywhere else.
More reasons to come to Canada
If market access isn’t enough, it’s important to note that there are a few other good reasons to build a manufacturing facility in Canada.
First, is talent quality. Canada is among the most educated countries on the planet – #1 for tertiary education (college, university, etc.) according to the Organization for Economic Cooperation and Development (OECD).
This workforce quality shows up in our products. Toyota’s manufacturing facility in Waterloo Region, for example, is the most awarded automotive manufacturing facility in the world, with 23 Plant Quality awards and a further 17 Vehicle Segment awards. That’s a big part of the reason the local facility was the first outside Japan to be trusted with building Lexus vehicles.
Waterloo is doing its part to develop that talent at the University of Waterloo – home to Canada’s largest engineering school – and Conestoga College, which has worked directly with Toyota to develop the next generation of talent.
Second, is cost. Thanks to favourable exchange rates, manufacturing in Canada has historically been a very cost-efficient endeavour. Wages are often lower but, notably, so is the cost of energy, the cost of building new facilities and more. Our provincial and federal governments also offer significant incentives for new manufacturing investments.
Finally, clean energy. In addition to being among the cheapest energy you’ll find in North America, the energy produced in Ontario – Canada’s largest province – is also among the cleanest. At any given time, approximately 85-90% of Ontario’s electricity is from clean sources. For forward-looking manufacturers looking to reduce their environmental footprint without incurring significant additional costs, locating in Canada can offer the best of both worlds.
Key Takeaways
- Canada is #1 in trade connections with G7 countries
- Establishing new international partnerships is a priority for the current Canadian government
- Despite recent uncertainty, trade between Canada and the United States remains strong
- Beyond deals with the United States, Canada has significant multi-lateral trade agreements with the European Union, the United Kingdom, Japan and more
- In addition to market access, Canada has the talent quality, cost advantages and clean energy to set up a successful manufacturing facility
Want to explore international expansion?
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