In light of the growing uncertainty in trade with the United States, Canadian companies are seeking reliable alternatives to stabilise their supply chains. German companies could benefit from this shift.
Since 4 March 2025, the US government has introduced new tariffs on Canadian goods. However, not all of the originally announced measures have been implemented. Currently, the following tariffs apply:
- 25% on goods that do not comply with the USMCA’s origin rules
- 10% on energy products imported from Canada that cannot claim USMCA preferences
- 10% on potash imported from Canada and Mexico that cannot claim USMCA preferences
- No tariffs on goods from Canada and Mexico that can claim USMCA preferences
These measures represent a significant burden on the Canadian economy. As a result, the Canadian market may increasingly seek alternative trading partners — an opportunity that German businesses could seize.
Canada’s Trade Under Pressure
The US tariffs affect numerous industries, including machinery, pharmaceuticals, food, and agriculture. Sectors with highly integrated supply chains are particularly struggling. While cars are still exempt from the tariffs, this is likely to be only a temporary reprieve.
Canada has responded strongly to these developments: The government has imposed counter-tariffs on US imports worth $30 billion and has called on citizens to boycott American products. Prime Minister Justin Trudeau has also advised against travelling to the US.
Impact on the Canadian Economy
The announcement of the US tariffs has already caused economic uncertainty in Canada. Forecasts from the Royal Bank of Canada suggest that Canada’s GDP could shrink by up to 2.6%.
The following sectors are particularly affected:
- Automotive industry and car parts
- Basic chemicals
- Machinery (agricultural, construction, and mining machinery)
- Oil and coal products
- Primary metals industry
- Aerospace industry
- Pharmaceutical industry
- Plastics industry
Opportunities for German Companies
Against this backdrop, German companies have a strategic opportunity:
- Canada may increasingly import “Made in Germany” machinery. Until now, around 50% of machinery and equipment have been sourced from the US. As these imports become more expensive, German suppliers could fill the gap.
- Car parts, electronics, and chemical products could also be sourced more from Germany.
- Canada plans to expand its export infrastructure to reduce its dependence on the US. This opens up new opportunities for German companies in energy, raw materials, and machinery sectors.
Source: GTAI (in German)
