Canada is preparing to impose retaliatory tariffs on about C$27.6 billion (roughly US$20 billion) of American goods from Tuesday, September 8, as the escalating dispute with Washington prompts businesses and policymakers to look beyond their traditional reliance on the US market.
The duties, ranging from 15% to 50%, follow President Donald Trump’s decision to impose 50% tariffs on selected Canadian goods from August 22. The measures were announced after trade talks broke down and Washington declined to extend the United States-Mexico-Canada trade agreement in July.
For Canada, the confrontation has exposed the risks of depending so heavily on one trading partner. The US accounted for about 65% of Canadian goods and services exports in the first half of 2026, down from approximately 75% in 2024, while the European Union and China each took around 5%.
Recent figures from Statistics Canada suggest the shift is continuing. In July, exports to countries other than the US reached a record C$25.6 billion, accounting for 33.7% of Canada’s exports that month, while shipments to the US fell by 6.6%.
Canada’s trade pivot towards Asia
No single destination can replace the American market, meaning Canadian companies will need to build a network of smaller markets rather than seek one new commercial home. Asia is emerging as the most promising area for that diversification.
Japan and South Korea are viewed as immediate priorities because of their purchasing power, strong legal systems and established economic links with Canada. Much of the trade between Canada and the two countries is already tariff-free, or is expected to become so.
Canada can supply energy and agricultural products, while Japanese and South Korean companies offer batteries, semiconductors, machinery and shipbuilding expertise. Taiwan could provide similar opportunities, although a proposed Canada-Taiwan trade co-operation framework has yet to be signed.
Energy is already leading the expansion. LNG Canada, backed by Malaysia’s Petronas, Korea Gas, Mitsubishi and PetroChina, has begun sending shipments from British Columbia to customers across Asia.
The Canada Energy Regulator said crude oil exports to destinations outside the US were worth about C$10 billion in 2025, averaging roughly 430,000 barrels a day. Alberta’s oil exports to China and South Korea then rose by 122% and 227% respectively during the first four months of 2026.
Other sectors likely to benefit include food and agriculture, forestry, aluminium, machinery and digital services. Vietnam, Malaysia and Singapore are all members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, giving Canadian exporters preferential access to markets with different strengths.
Vietnam offers fast-growing demand and manufacturing opportunities, Malaysia has potential in industry and processed food, while Singapore can act both as a regional base and as a sophisticated market for specialist food and technology products.
India and Indonesia are larger but more difficult markets, with opportunities in machinery, infrastructure, industrial technology and specialised components. China is expected to remain a selective destination because of national security concerns and disputes over industrial overcapacity, with trade likely to focus on areas such as pulp, paper, industrial materials and premium consumer goods, alongside energy.
Businesses face a knowledge gap
The main obstacle may not be market access. Canada already has trade agreements, government agencies, business councils and chambers of commerce designed to support commercial links across the Pacific.
Instead, officials and business groups say too many companies know little about the opportunities available. An Angus Reid Institute poll for the Asia Pacific Foundation of Canada found that 73% of Canadians said they knew little or nothing about South Korea, rising to 82% for Singapore and 90% for Malaysia.
Support for the CPTPP was nevertheless high, at 78%, despite limited public understanding of the countries covered by the agreement.
The lack of familiarity is also evident on the other side of the Pacific. A survey of 276 Indonesian companies by Kadin, the country’s chamber of commerce, found that 84% had either never heard of, or knew very little about, Indonesia’s trade agreement with Canada.
Similar difficulties have been reported among private companies in Vietnam, particularly outside the technology and manufacturing sectors.
Canadian trade officials and business organisations now face the task of encouraging companies to investigate unfamiliar markets, build contacts and make use of existing tariff preferences.
The new counter-tariffs will intensify the immediate pressure on Canadian and American firms, but the longer-term consequence may be a lasting attempt by Canada to reduce its dependence on the US. The success of that effort will depend not only on government agreements, but on whether companies on both sides of the Pacific are willing to do business with partners they have so far largely overlooked.
