Canadian businesses looking to sell overseas face a mix of obstacles, from complex customs rules to shifting tariffs. International trade makes up roughly two-thirds of Canada’s Gross Domestic Product, yet many small and mid-sized companies hesitate to expand because their managers do not know how to handle these trade barriers. Demand for Canadian products exists globally, but logistical hurdles and knowledge gaps often stop the sales from happening. To help businesses understand these challenges, officials and trade organizations have outlined the most common barriers and practical ways to overcome them.
Four major obstacles for small exporters
Learning the rules for every country you want to export to is a major hurdle. Canadian firms must manage both domestic regulations and the specific customs procedures of their target markets. This adds to the administrative burden, and small businesses often lack the in-house expertise to handle it. About 80% of trading small and medium-sized enterprises lean on customs brokers and intermediaries to manage these requirements, according to the Canadian Federation of Independent Business.
One effective way to reduce risk is through Canada’s network of Free Trade Agreements. These treaties cover 51 countries and provide access to a market of more than 1.5 billion consumers. The presence of established agreements lowers the risk and makes it easier to find information on doing business with these markets. Resources like the Trade Commissioner Service and local small business networks can help companies access this information.
Building a supply chain that can handle disruptions is another critical step. Shipping costs are the biggest challenge for SME exporters, affecting 66% of firms. Currency fluctuations and duties follow closely behind. Businesses that front-load inventory and diversify suppliers are better able to handle these changes. This approach requires investing time in relationships and the tools needed to move products reliably to customers. Other Canadian companies have successfully adapted by forming strategic partnerships and working closely with advisors from organizations like Export Development Canada.
Managing taxes and tariffs
Tariffs, duties, and border taxes can change quickly. That uncertainty hits exporters right in the margins. Historically, the United States has been Canada’s biggest trading partner. Sudden increases or new retroactive charges can make a previously profitable contract unviable practically overnight. This is especially true for smaller businesses. Uncertainty over the changing tariff environment may discourage some companies from expanding. Despite these shifts, there are still opportunities for growth. Reaching consumers in the U.S. or other nations with trade relationships remains possible.