Canadian manufacturers are starting to reimagine their business strategies as tensions rise across the border. Once heavily reliant on U.S. markets, these companies are now pivoting to Asia, Europe, and even local markets, due to increasing uncertainty fueled by President Donald Trump’s tariff policies and unpredictable rhetoric.
For decades, Canada depended on the United States for nearly 75% of its exports. That stable trade relationship is now in flux. With tariffs on steel, aluminum, and auto parts—and talk of annexation—Canadian businesses are being forced to rethink the way they operate.
Take PNP Pharmaceuticals in British Columbia, for instance. The company, which manufactures capsules and tablets for the pharmaceutical industry, is now exploring partnerships in Asia. Alan Urmeneta, the company’s sourcing manager, says they’re preparing for a future where the U.S. might not be their primary market anymore.
It’s not just pharmaceuticals. Wellmaster, a steel component manufacturer, has warned long-standing American clients to expect higher prices. Meanwhile, Concept Factory Inc., which creates mascot costumes for schools and sporting events, has already slashed prices in a desperate bid to retain U.S. customers.
The pressure started mounting in March, when Trump imposed a 25% tariff on steel and aluminum imports. He followed that up with another 25% on vehicles and parts not compliant with USMCA standards. While broader reciprocal tariffs haven’t been fully enforced, the threat alone has rattled Canadian manufacturers.
Adding to the tension, Trump claimed Canada is responsible for the flow of fentanyl into the U.S.—even though official data shows less than 1% of fentanyl seizures come from Canada. His administration has gone so far as to joke that all tariffs would be lifted if Canada simply became “the 51st state.”
Mark Carney, Canada’s newly elected Prime Minister, is having none of it. He campaigned on standing up to Trump and has openly declared that the old relationship with the U.S. is “over.” Though he’s scheduled to meet Trump in Washington, insiders say the business world isn’t holding its breath for a resolution.
Industry consultant Mike Chisholm puts it bluntly: “No smart business is going to put all its eggs back in the U.S. basket. Everyone wants stability, and the U.S. no longer offers that.”
Many of his clients are opening offices in Europe and Asia, seeking trade relationships under less volatile conditions. Others, like LabelPak Printing Inc., are considering scaling back U.S. sales entirely and focusing on the Canadian market.
But the pivot isn’t easy. Canada’s economy is about a tenth the size of the U.S., and overseas logistics are expensive. Smaller firms especially are struggling to find alternatives.
Fusion TG, a Montreal-based steel distributor, is one such business. Owner Natalie Gaudreault says tariffs have doubled the cost of goods sold to U.S. clients. With 20% of her revenue coming from the U.S., she’s had to pass on costs—leading to a 33% drop in sales.
Some businesses are even renegotiating contracts to share the tariff burden—moves that rarely go over smoothly. “It’s like cutting with a hot knife,” says trade lawyer Clifford Sosnow. “Nobody escapes unscathed.”
As Canadian companies chart new paths forward, one thing is clear: the golden age of U.S.-Canada trade may be behind us.
