EDC survey: Trade uncertainty dampening the outlook of Canadian exporters

Market diversification top of mind - 71% of exporting respondents eye new markets 

Export Development Canada (EDC) released today its latest biannual Trade Confidence Index (TCI) that monitors and analyzes the sentiment of Canadian exporters and ready-to-export businesses in the current and future global trade environment. The mid-year 2025 TCI score for exporting respondents now sits at 65.7, down 3.3 points since the year-end 2024 survey, as they face mounting pressures on multiple fronts. The index revealed a continued decline in trade confidence since 2022, with the overall score trending below its historical average of 72.5

“Canadian exporters are navigating a challenging global economic outlook marked by shifting U.S. market dynamics and ongoing tariff negotiations—all of which are weighing heavily on their confidence,” said Stuart Bergman, EDC’s chief economist. “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.” 

Export sales are being impacted by weakening U.S. demand, a trend that has intensified over the past six months. According to the survey, 40% of exporting respondents reported a decline in U.S. orders, significantly higher than the 16% reported in the year-end 2024 survey. This sharp decline reflects broader economic headwinds in the U.S., including slowing consumer demand, tighter monetary policy and shifting supply chain priorities. Looking ahead, Canadian exporters remain cautious: 36% of U.S. exporting respondents anticipate a further decrease in orders over the next six months.

The survey results indicate that tariffs are weighing on sales expectations. Nearly two-thirds of exporting respondents (63%) anticipate negative impacts on their international sales, while 40% expect these effects to spill over into domestic markets. In response to those challenges, exporters have applied a range of strategies. These include lowering profit margins (28%), increasing domestic sales (26%), diversifying into new export markets (25%) and sourcing locally (23%).

Increasing interest in market diversification

Despite the decline in confidence, exporters are actively exploring new markets as a means of growing their customer base. The majority of exporting respondents (71%) plan to expand their business into new markets within the next two years and are taking a more targeted approach compared to past surveys, focusing on countries where Canada has free trade agreements in place. Europe is the top planned destination, cited by 32% of exporting respondents, followed by Asia and Oceania (18%), Latin America and the Caribbean (15%), and the U.S. (15%).

“Exporters are showing interest in diversifying trade, however, they are choosing fewer markets within each region, potentially pointing towards a more focused diversification strategy. 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.

Other findings:

• Exporting respondents shared they are experiencing financial challenges such as maintaining a sufficient cash flow (36%), rising business expenses (35%), maintaining profitability (33%) and a volatile Canadian dollar (27%).  
• Meanwhile, the need for funding is rising amid tariff uncertainty. More than one-third (34%) expect financing terms and conditions to worsen, a statistically significant increase from 22% in the year-end 2024 survey.
• Most respondents use free trade agreements, with the Canada–United States–Mexico Agreement (CUSMA) being the most used (58%). Of those that export to countries that have ratified free trade agreements, 34% use the Comprehensive Economic and Trade Agreement (CETA) to access the European Union, and 14% leverage the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to export to the Indo-Pacific region.
• More than half of exporting respondents (55%) have undertaken or plan to pursue direct investment activities abroad. The top planned destinations for Canadian Direct Investment Abroad (CDIA) are Europe (12%) and the United States (10%).

For more information, visit edc.ca.

Survey methodology

The TCI survey was conducted between May 30 and July 13 and released on Sept. 4, 2025. Since 1999, EDC surveys Canadian exporters and businesses planning to export twice a year. The results are a pulse check of their level of confidence and expectations of international trade opportunities over the next six months. The TCI data is weighted to represent the Canadian exporter and ready-to-export population. The 2025 mid-year TCI received a total of 1,073 respondents, with 688 completing all five TCI questions used to calculate the overall index score.