Many exporters are facing a lot of pressures
The number of Canadian exporters that show confidence within the current global trade environment has decreased, a survey by Export Development Canada (EDC) found.
According to EDC’s biannual Trade Confidence Index (TCI), exporting respondents had a TCI score of 65.7, which was a decrease by 3.3 points form the survey by the end of 2024.
Stuart Bergman, chief economist at EDC, pointed out that Canadian exporters are navigating a challenging global economic outlook which is affected by the shifting dynamics of the US market as well as ongoing tariff negotiations. He said that such factors are affecting their confidence.
The score also denoted a continuing decline in trade confidence since 2022 as overall scores continued to be lower than the historical average of 72.5.
“This is one of the lowest TCI readings on record, with scores reaching below this level in only three other instances: the global financial crisis, the COVID-19 pandemic and the post-pandemic inflation surge,” said Bergman.
Following the weakening US demand, export sales are being heavily impacted. About 40% of the exporting respondents reported that they experienced a decline in US orders, which was a staggering increase from the 16% recorded at the previous iteration of the survey. Around 36% of the respondents also believe that US orders will continue to decline in the next six months.
As tariff negotiations continue, about 63% of the respondents believe that there will be a negative impact on their international sales while 40% are expecting that the effects of the tariffs will go over to the domestic markets. The solutions of exporters to such challenges include lowering their profit margins (28%), increasing domestic sales (26%), diversifying into new export markets (25%), and sourcing locally (23%).
Despite the lowered percentage of confidence among exporters, 71% of the respondents are planning to expand their business into new markets in the next two years. Many aim to focus on countries that have free trade agreements with Canada, with Europe taking the top spot as a planned destination among respondents (32%). This is followed by Asia and Oceania with 18% of the respondents.
“Market diversification is integral to Canada's economic resilience and growth. In the long-term, diversification can help exporters to reduce their dependence on a single market and strengthen their competitiveness,” said Bergman.
The federal government has been coming up with strategies to deal with the tariffs imposed by US President Donald Trump. While retaliatory tariffs are also being imposed, a Global News report stated that other strategies such as mandating the use of local content in federal projects are also being considered.
