Top Considerations for EU Companies Expanding to North America

From across the pond, the North American market beckons. Its consumer population and staggering GDP alone are enough to entice tech companies and manufacturers alike. Then, like cherries on top, there’s the talent, innovation capacity and capital.

North American markets operate at a speed and scale unlike anywhere else in the world. Expanding your operations to North America is a good decision, and we’re not just saying that because we’re an investment attraction organization in Waterloo, Canada. Well, not entirely.

Now, granted, the US contributes significantly to these assets, but there are strong arguments for expanding to Canada rather than the US to access the North American market. From the Waterloo region, for example, you can still access major US markets while enjoying a better cultural fit, operating in a more stable business environment and tapping into stronger global trade networks.

Here’s what to consider when expanding to North America.

Consideration #1: Culture fit

For a visiting European, we’d wager Canada looks and feels more like home than the US. You may recognize a lot of yourself in this country, and not just when Oktoberfest rolls around in the fall.

More broadly, our shared history, commitment to multilateralism and progressive political and cultural values bind us together in a way the US cannot claim. Democracy, the rule of law and social welfare are foundational to both societies, whereas the US is founded on values like individualism and personal liberty.

What’s more, Canada’s legal and linguistic foundations are rooted in European heritage. Our legal system is the same as the United Kingdom’s, and France’s language and culture have shaped an entire province, Quebec. French is also Canada’s official second language. In the Waterloo area, there are communities where Portuguese, Polish, German, Dutch, Serbian, Romanian and Spanish are the most common non-English languages.

From a business standpoint, culture fit reduces friction as you scale your business operations and collaborate with a wider network of organizations and research hubs in your industry. Your company can find cultural alignment in Canada, and your people can join communities that look, feel and sound like home.

The annual keg-tapping at the Waterloo region’s Oktoberfest celebrations

Consideration #2: Business environment and operations

Canada offers a trusted, stable business environment so you can establish operations here with predictability and low volatility. Canada and several European countries share compatible high standards on labour, environment and consumer protection, reducing compliance risk for expanding companies.

You can’t say the same in the US. There’s less government support, higher upfront costs and increased volatility. Salaries will cost you more. Plus, each state operates differently, whereas you’ll find similarities and a more centralized approach across Canadian jurisdictions. In the US, it’s kind of like dealing with 50 mini markets.

Your tax burden will be less in Canada, too. Expanding to our country reduces upfront costs and overall corporate taxes. Plus, Canada’s public healthcare allows corporations to pay significantly less in employee benefits—without sacrificing workers’ health. It’s a unique business benefit of socialized healthcare, which isn’t an option in the US. In fact, private health insurance often adds 15 – 25% to total employer cost after payroll taxes.

Here’s a snapshot of tax rates in regions across Canada and the US.

And then there’s talent.

While the US has more people to hire, Canada has strong, concentrated pools of talent. The Toronto-Waterloo Corridor, for instance, is North America’s largest tech talent market. The Corridor also boasts 351,713+ manufacturing workers, while Waterloo is Canada’s largest robotics and automation cluster. You can find, hire and retain the talent you need to launch and sustain a successful business in Canada.

Consideration #3: Trade

Did you know that the EU’s oldest formal relationship with any industrial country is with Canada? In 1959, we signed the Agreement for Cooperation in the Peaceful Uses of Atomic Energy. Since then, our relationship has evolved, and we remain partners that work together to solve global challenges and leverage opportunities. The current agreement between Canada and the EU is called the Comprehensive Economic and Trade Agreement (CETA). We also have a deal with the UK, the Canada-UK Trade Continuity Agreement (TCA), which was established directly after Brexit.

With operations in Canada and Europe, your company can deploy CETA and TCA from both sides of the Atlantic. Dual operations transform the agreement into a platform for integrated North American-European supply chains, promoting trade, investment and sustainable development.

Your company can:

• Build transatlantic supply chains that eliminate most tariffs
• Reduce certifications and avoid duplicate testing
• Bid and deliver public contracts in both jurisdictions, capitalizing on your local presence
• Optimize investment flows across the two markets with CETA’s investment protections, reducing friction and policy risk
• Hire top talent across jurisdictions and bring in specialists using CETA’s temporary-entry rules for intra-company transferees, professionals and business visitors, making it easier to share expertise between teams
• Take advantage of early visibility into regulatory systems on Canadian and EU sides by utilizing the Regulatory Cooperation Forum, which helps you plan product changes and compliance work with fewer surprises

The agreement also encourages competition and collaboration, allowing companies to operate more efficiently and innovatively.

The US, on the other hand, is currently embroiled in several trade wars and is doubling down on protectionist measures. The country is not exactly sending strong signals that global trade is a top priority, and its approach to international relationships has become increasingly unpredictable, even with its existing trade partners.

From coast to coast, European companies will find cultural and business similarities in Canadian communities like the Waterloo region. If you’re looking across the pond for a new home, Canada should be your top consideration.