A year marked by tariffs and uncertainty strained Canada-U.S. relations, underscoring an urgent need for Canadian exporters to increase sales to other international markets.

A shift, while small and helped along by the price of gold, is already visible: the value of exports to non-U.S. destinations grew last year, driving the percentage of total Canadian exports that went to the U.S. to a historic low.

Despite gains in overseas markets, the U.S. remains the dominant destination of Canada’s exports. This conclusion, drawn from Statistics Canada's 2025 exporter characteristics datasets, is the feature of today's Twenty-Four.

U.S. still dominates, but non-U.S. customers on the rise

While the number of Canadian export establishments* selling goods to the U.S. remains high (86% last year), it saw a tick down of 1.4% from 2024. This marks the second consecutive annual drop and the largest decrease since the trade disruptions of the pandemic. The provinces most affected by last year's tariff burden—Ontario, Quebec, and B.C.—were responsible for the bulk of this reduction.

The number of firms exporting to other countries grew by 6.4%, reaching a four-year peak. This growth was largely fueled by more exporters to African nations, such as Ghana and Nigeria. The number of exporters to Middle Eastern countries, including Saudi Arabia and the U.A.E., also saw a notable increase, hitting the highest number since 2018.

With the exceptions of Prince Edward Island and Newfoundland and Labrador, every province experienced an increase in the number of establishments exporting to non-U.S. markets. For example, Alberta had a 10% increase in non-U.S. market exporters, successfully counteracting the declines of the same to the U.S., led by gains in Australia, Kuwait, and Uzbekistan.

More large establishments

Larger companies are more likely to engage in international trade diversification. In 2025, nearly one-third of larger establishments reported trading with more than one country, compared to only 23% of smaller establishments. Although representing only 2% of the total, these multi-country exporters accounted for nearly two-thirds of Canada's total export revenues last year, their highest share since 2020.

It predates Trump 2.0, but it’s helpful for trade diversification that the number of large Canadian goods-exporting establishments (over 500 employees) reached a record high last year (data since 2000), increasing for the fifth consecutive year.

However, most Canadian exporting establishments, regardless of their size, still rely on a single foreign customer. Last year, only 23% of exporting establishments reported having multiple foreign customers. This figure is essentially unchanged since 2023 and remains significantly lower than the record high of 30% set in 2014. The dependence on a single country is often attributed to several factors: the small size of export establishments in Canada; close proximity to the largest international market (the U.S.); and heavily integrated supply chains across North America.  

Early signs of trade diversification last year

Diversification efforts were noteworthy for Canada last year, but the story is more nuanced when export revenue is examined alongside the number of export establishments. 

There was, in fact, a 17% surge in the value of goods exported to other markets (led by Europe). This was driven largely by gold export prices, which increased 46%, and bolstered the value of shipments to the U.K. last year. Overall, the jump in export revenues to non-U.S. destinations managed to outweigh the 5.3% pullback in the value of exports to the U.S.

Meanwhile, Alberta witnessed a 65% increase in energy exports to non-U.S. markets last year with the Trans Mountain Expansion fully operational. However, the total value of goods exports still fell as a surge in exports to other countries could not fully counter the revenue losses from lower U.S. sales, which were largely a result of lower energy prices.

Bottom line

Given the United States is the world's largest economy and Canada's closest neighbour, the two countries share one of the most substantial bilateral trading relationships globally. This relationship is vital, fostering integrated supply chains, significant investment, and millions of Canadian jobs. Consequently, the focus is naturally on the upcoming CUSMA review later this year.

With that said, relying so much on a single trading partner inherently carries risks. As a result, initiatives to diversify trade and enter new markets are vital.

*An establishment is the smallest statistical unit within an enterprise, defined by its primary industry and the province of the exporter/importer. A single enterprise can include multiple establishments across different industries and locations. For statistical reporting, an exporting establishment is counted separately for each country it exports to in the reference year. Therefore, an establishment exporting to both the U.S. and China is counted once for each country, meaning the total number of exporting establishments across all destinations is non-additive.

Answer to the previous trivia question: Sheryl Crow’s song “If It Makes You Happy” was released in 1996.

Today’s trivia question: What country was Canada’s second largest customer last year?