In a world facing a potential economic slowdown, tariff wars, trade tensions and geopolitical uncertainties, Canadian businesses may feel inclined to retrench and tend to business at home. Fight that inertia, advises David Watt, chief economist, Canada at HSBC Canada — now’s the time to plan your entry into new markets and explore potential opportunities in international waters.
“In the past couple of years, we’ve signed free trade deals with 28 European nations through the Comprehensive Economic and Trade Agreement and with 10 other counterparties in Asia through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP),” says Watt. “These are all markets Canadian companies haven’t pursued eagerly because of distance and tariffs. These new agreements provide a breadth of opportunities to take advantage of markets they might not have considered before. With emerging frictions in traditional trading markets in North America, Canadian companies can no longer afford to be complacent about exploring these options and taking advantage of global growth in the coming decades.”
Countries such as Vietnam have already been highly motivated to integrate themselves into global supply chains. Following the signing of CPTPP, they were quick to provide items such as footwear and clothing to Canada that they were already supplying to the U.S.
“Canadians now need to figure out what they can sell profitably to Vietnam, for example,” says Watt. “Provinces such as Saskatchewan with established global markets for potash may already have a good idea of what they want to sell there. Pork producers may see opportunities. Ontario manufacturers who have long been oriented north-south, may be overlooking opportunities there. Now is the time to see where we fit in that market, even travel to Vietnam to learn about the relevant supply chains and get to know businesspeople there.”
Canadian companies may find receptive audiences overseas. Watt notes that global trade skirmishes are influencing foreign markets to rethink their own supply chains. International companies that once exported directly from China to the U.S. are now setting up domestic operations in Mexico to access the U.S. market without paying tariffs. Smaller Asian countries are benefiting because companies are also setting up shop there to avoid exporting from China.