Only 13% of Canadian manufacturers likely to change export strategy despite trade disputes even though 87% are looking beyond the US market

Canadian manufacturing to all appearances took a few heavy hits in disputes with its largest trading partner, the United States, yet manufacturers and exporters in Canada are a hardy group, resistant to change. David Kennedy, writing in Export Insights 2018, put it this way:

For exporters, turbulence has become par for the course. A year since the surprise results of the 2016 U.S. election, the nearly 25-year-old North American Free Trade Agreement is on the ropes, the long-awaited Trans-Pacific Partnership appears dead on arrival and protectionist trade rhetoric is no longer reserved for fringe policymakers. Across the Atlantic, the United Kingdom continues to negotiate its reluctant split from the European Union, while elsewhere, the emerging economies of countries such as China, India and Brazil continue to build up steam, bringing profound change to the long-standing economic order. Despite the changing landscape, Canadian exporters aren’t running for cover—and they shouldn’t be.”

This seems to be the theme of a new research report, Export Insights 2018: Canadian Manufacturers are strongly placed to export during unpredictable times. The main reason exporters are unlikely to quickly reduce reliance on the U.S. for exports is magnitude.

98% of Canadian exporter respondents export to the U.S.

In a survey of major exporters, published under the title Export Insights 2018, only 13 percent of respondents plan to change export strategies despite turmoil and tariffs from the biggest trading partner, the United States:

• 98% of exporters trade with the US
• the United States represents 24.5% of World GDP — versus Canada’s 2 % and China’s 14.8%
• 42% of exporters from Canada trade with the U.S.
• 32% trade with China
• Only 42% of survey respondents had a detailed and comprehensive exporting strategy — despite the turmoil.

“The U.S. remains the top market choice for Canadian exports, despite the recent election of President Donald Trump and uncertainty about existing trade agreements such as NAFTA,” writes Dale Kehler, Vice President SYSPRO, who sponsored the report. “65 per cent of those surveyed report they have not yet adjusted their current export strategy as a result of the election. With trade talks unfolding, 39 per cent report no current impact to their export practices and only seven per cent cite shifting resources to other markets. Paradoxically, 87 per cent of respondents agree they must diversify beyond U.S. borders in order to grow their exports.”

The EU and CETA

The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) offers some possible future balancing potential for exporters in the future, although companies responding to the survey seemed lukewarm on the effect of the deal on their export plans.