Many Canadian businesses struggle to enter global markets due to obstacles like complex customs regulations, rising shipping costs, supply chain disruptions, cultural and language differences, and changing tariffs. Despite strong worldwide demand for Canadian goods and services, local reports indicate these hurdles often block expansion efforts for domestic companies.
International trade accounts for around two-thirds of Canada’s Gross Domestic Product (GDP). However, small and mid-sized companies often assume they are not ready for international trade due to a lack of knowledge on managing trade barriers.
Top Market Barriers for Canadian Exporters
One of the biggest barriers is learning the rules and regulations. Canadian businesses must learn and comply with rules covering product safety standards, labelling, and customs procedures for each country they want to export to.
Surveys by the Canadian Federation of Independent Business (CFIB) show that small firms see complex regulatory frameworks, compliance requirements, and the costs associated with shipping as major obstacles to trading internationally. Many businesses respond by leaning heavily on customs brokers and intermediaries to manage customs and regulatory requirements.
The easiest way to break into international trade is through one of Canada’s 15 Free Trade Agreements (FTAs), which cover 51 countries and could reach a market of more than 1.5 billion consumers. These FTAs provide a lower-risk entry point into international trade, with easier access to information on doing business with these consumers.
Building a Smooth-Running Supply Chain
Once a basic understanding of rules and regulations is established, Canadian businesses need to apply that knowledge to building their supply chain. This includes everything from manufacturing a product to getting it into customers’ homes.
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Building a resilient supply chain foundation is key, rather than chasing the absolute lowest cost. Canadian businesses that front-load inventory and diversify suppliers are better able to stay ahead of supply chain disruptions.
For example, Nova Craft Canoe was able to expand into new markets in Denmark, Finland, and Germany by forming strategic partnerships and working closely with advisors at Export Development Canada (EDC). Credit insurance reduced the risks of doing business with suppliers and buyers in other countries, allowing Nova Craft Canoe to find the best partners.
Shipping costs are a significant challenge for SME exporters, affecting 66% of firms, with currency fluctuations and duties and taxes close behind, according to the Canadian Federation of Independent Business (CFIB).
Developing language and culture competency is essential for Canadian businesses to succeed in international markets. Understanding the culture of new markets and finding trustworthy translation support is critical. Packaging, marketing, and documentation must appeal to the target audience. Companies like Storkcraft have successfully expanded into international markets by including staff with cultural insights from their target markets.
Staying Ahead of Changing Tariffs and Taxes
Tariffs, duties, and border taxes can change quickly, affecting exporters’ margins. The United States, Canada’s biggest trading partner, can impose sudden increases, making a previously profitable contract unviable. Companies like Nova Craft Canoe and Storkcraft work closely with the Canadian Trade Commissioner Service to stay up-to-date on tariffs and taxes.
Canadian businesses can use resources like the Tariff Finder to ensure they operate with the most current information. Keeping up with taxes, tariffs, laws, and regulations for two or more countries is an ongoing challenge. Practical, execution-focused international trade training can help build real-world trade competence and fine-tune a company’s approach to international trade.
