How to diversify your exports beyond the U.S.

For many Canadian exporters, the United States (U.S.) is the natural first step into international markets. Its proximity, familiar business culture and trade agreements, like the Canada-United States-Mexico Agreement (CUSMA) make it an appealing choice. But with shifting trade policies, rising tariffs and increasing uncertainty, many Canadian businesses are exploring how to diversify their exports beyond the U.S. Diversifying your export strategy is important for managing risks and creating new growth opportunities. New markets provide access to a wider consumer base, allowing businesses to innovate, adapt and gain resilience. According to Export Development Canada's (EDC) year-end Trade Confidence Index, exporters who trade in more than one country reported higher confidence levels and greater stability when compared with those focused solely on the U.S. market. 

Expand your understanding of how and where to diversify your markets to avoid overdependence and ensure future growth.

Why Canadian exporters should diversify their markets

1. Manage market risks: The U.S. has traditionally been a dependable market for Canadian exporters, but recent developments in American trade policies have shown how relying on one market can pose serious challenges. By diversifying, you protect your business against sudden disruptions and strengthen resilience.
2. Access untapped global demand: Expanding internationally introduces your products and services to new customers. Regions, like the Indo-Pacific, Latin America and the European Union (EU), are actively looking for Canadian expertise and high-quality products.
3. Enable potential growth: A diversified export portfolio drives long-term growth. Canadian firms with a global strategy are better prepared to respond to shifting global trends or economic changes.

A great example of successful diversification is Vortex Aquatic Structures International, a Montreal-based company specializing in aquatic play products. After finding success in the U.S. and Canadian markets, the company discovered significant demand for its products in other countries. By taking a strategic approach to managing growth while maintaining product quality and customer service, the company was able to complete more than 10,000 projects in 50 countries. A leader in their field, their story highlights the benefits of a strong export diversification strategy. 

How to expand into new markets

Building a strategic export plan doesn’t happen overnight. Below are six key export diversification strategies to help guide you into new export markets:

1. Make the most of Canada’s trade agreements

Canada’s free trade agreements (FTAs) simplify the process of entering new global markets. With 15 agreements spanning more than 50 countries, FTAs provide access to reduced tariffs and frameworks for smoother trade operations. Here are three examples of Canada’s strong trading blocs:

• Canada-European Union (EU) Comprehensive Economic and Trade Agreement (CETA): Enables Canadian exporters to access all 27 EU member countries tariff-free. The EU is our second-largest trading partner, making it a logical next step for businesses.
• Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP): Offers access to the Indo-Pacific region, including markets such as Japan, Australia and Vietnam.
• Canada-United Kingdom (U.K.) Trade Continuity Agreement (Canada-U.K. TCA): Ensures continued preferential access to the U.K. market, one of Canada’s top global partners.

The Canada Tariff Finder, and resources through the Trade Commissioner Service (TCS), provide additional benefits regarding Canada’s free trade agreements.

2. Take advantage of global e-commerce

Online sales have transformed how businesses trade internationally. Canadian exporters can use e-commerce to bridge distances, but to succeed, you need to adapt to the habits of your target market.

For example, if you’re looking to do business in the Indo-Pacific region, you should consider:

• Regional variations: E-commerce platforms, like Shoppee, WeChat (Xiaodian) and Coupang, are popular in this area and can connect you to loyal, engaged customers.
• Local expertise: Partnering with local experts such as WPIC Marketing + Technologies can help fast-track your entry with customized e-commerce strategies designed for local audiences.
• Alternatives to direct-to-consumer sales: If direct-to-consumer sales aren’t the right fit, selling to local wholesalers or distributors can transfer marketing responsibilities to retailers familiar with the market.

By focusing on the right partners and platforms, you can create a strong foundation for long-term global success.

3. Identify high-potential export markets

Not every market will align with your products or business model. Conducting thorough research is key to navigating high-growth markets for Canadian exporters and finding markets with the right growth potential while minimizing risks.

• Global demand for your products or services: Tools, like EDC's Global Economic Outlook, can help you identify markets with high-growth potential and discover trends in consumer behaviour, commodity prices, exchange rates and trade volumes.
• Risks and stability: EDC's Country Risk Quarterly evaluates political and economic stability, helping you find reliable opportunities in overseas markets.
• Market similarities: Target markets that align with Canadian regulations, consumer expectations, or business culture to ease the transition before branching into more diverse regions.

4. Adapt your business for new markets

Each market comes with distinct regulations, consumer expectations and culture differences. Adjusting your operations is key to overcoming these barriers. For example:

• Adapt marketing materials to suit the new audience while keeping the original intent.
• Adjust packaging to meet regional regulations and preferences.
• Understand cultural nuances such as negotiation styles or business etiquette.

If you don’t have a plan for adapting your products or services for new markets yet, the Forum for International Trade Training (FITT) can help. FITT provides practical international business training, resources and professional certification to individuals and businesses.

“Succeeding in international markets takes more than ambition,” says Silvia Baptista, vice-president of FITT. “We offer an EDC-FITT online course to help Canadian business leaders understand how to adapt to the regulatory, cultural and consumer differences that define international trade."

FITT can also connect you to a CITP global business expert to help you navigate new markets.

5. Build strategic partnerships

Creating strategic alliances with local distributors, agents, or joint ventures abroad can speed up market entry. Attending trade events for Canadian exporters and industry forums allows you to connect with potential partners who understand the region’s logistics, legal requirements and cultural preferences.

Start with multinationals

Growing your business overseas presents unique challenges and costs compared to the U.S. But as the world’s largest market, the U.S. attracts multinationals—both foreign-owned and American-owned companies—which Canadian businesses can use to their advantage.

“By going global with U.S.-based multinationals, Canadian companies are able to develop business at a fraction of the cost,” says David Weiner, EDC’s regional vice-president for the United States. “It’s closer and cheaper to get there and typically, you can gain access to higher levels of corporate leadership than you could in the multinational’s home country.”

Whether you’re wondering, how to get the most from your trade show investment and connecting through trade shows, local partnerships or multinationals, it’s essential to clearly define each partner’s roles and establish mutually beneficial agreements.

6. Strengthen your supply chain with diversification

In today’s unpredictable markets, managing your supply chain risks by diversifying your suppliers and sourcing regions is essential. While supplier diversity and supply chain diversification are often used interchangeably, they’re distinct strategies that bring unique benefits to your business.

Supply chain diversification

Sourcing goods or services from multiple suppliers across various regions can help reduce dependency on one supplier and mitigate risk. It helps your business:

• Build resilience: Protect against disruptions from trade tensions and political unrest.
• Control costs: Having multiple suppliers keeps pricing competitive and helps avoid costly disruptions.
• Adapt and innovate: Exposure to new markets, practices and technologies helps your business say ahead of the curve.
• Go green: Sourcing locally or choosing suppliers with ESG (environmental, social and governance) initiatives can reduce your environmental impact and costs.

Supplier diversity

Partner with under-represented supply chain vendors such as those women- or Indigenous-owned businesses. It’s not just about meeting ESG goals; it’s about providing real value:

• Market expansion: Diverse suppliers can open doors to new markets and opportunities.
• Innovation: Suppliers with different perspectives drive smarter, more creative solutions.
• Reputation boost: Demonstrates your commitment to inclusivity, which resonates with socially conscious consumers and stakeholders.
• Competitive edge: Especially for businesses expanding into markets, like the EU, U.K., Japan and Australia, which prioritize sustainable ESG business practices.

Where exporters can find trade resources and support

1. Trade Commissioner Service (TCS)

With more than 1,000 trade professionals in more than 160 cities worldwide, the TCS provides in-depth insights in response to U.S. tariffs to help Canadian businesses succeed in new international markets.

2. Business Development Bank of Canada (BDC)

BDC offers financing, advisory solutions and venture capital for small- and medium-sized enterprises (SMEs) in all industries and at all stages of growth.  

3. Canadian Commercial Corporation (CCC)

As Canada’s government-to-government contracting agency, the CCC supports sales to foreign governments at all levels and assists in mitigating transaction risks for both you and your buyer. The CCC's Global Bid Opportunity Finder helps Canadian businesses search for commercial opportunities with foreign governments.  

4. Innovation, Science and Economic Development Canada (ISED)

By improving conditions for investment and fostering a fair and competitive marketplace, ISED shares Canadian innovation with the world. Their resources and tools include:

• The ISED Accelerated Growth Service provides access to government services, including financing and exporting advice.
• The ISED Business Benefits Finder offers a tailored list of supports, including funding, tax credits and expert advice.

5. Export Development Canada

EDC offers financial and non-financial solutions and support to businesses that want to expand abroad. Learn more about how our financial and knowledge solutions can help you understand the opportunities in your target market and make exporting less risky. 

Build a successful export diversification strategy

Shifting economic policies and trade tensions make diversifying your export markets essential for long-term resilience and growth. Building a successful diversification strategy doesn’t happen overnight, but every small step takes you closer to achieving your global potential. By taking advantage of Canada’s trade agreements, conducting thorough research and tapping into government resources, you can set your business on a path to resilience and growth.

Whether you’re contemplating your first step, or refining your export strategy, EDC is here to support your export journey. Start shaping your future today.

This content was partially created using generative artificial intelligence (GenAI).