Trade uncertainty could weaken business investment as Canada seeks new markets, Business Council of Canada CEO Goldy Hyder has warned.
Hyder said Canada should diversify its trade relationships while preserving close economic ties with the United States and Mexico. His warning comes as companies assess policy risks and the future of the North American trade agreement.
The message reflects a difficult choice for Canadian policymakers. They want to reduce dependence on one market, yet Canadian firms still rely heavily on continental supply chains.
Uncertainty Complicates Business Planning
Major investments often require years of planning. Companies must estimate future costs, market access, tariffs, currency risks and regulatory requirements before approving new plants or equipment.
Unclear trade rules can delay those decisions. Businesses may hold cash, scale back projects or invest in countries offering more predictable access to customers.
Hyder warned that “trade uncertainty could chill investment” as Canada pursues a wider group of commercial partners.
The concern reaches past large corporations. Reduced spending by major employers can affect construction firms, parts suppliers, transportation companies and local service businesses.
Uncertainty can also weaken productivity growth. New machinery, software and facilities often help workers produce more. Delayed investment may leave Canadian firms less able to compete on cost and output.
Diversification Offers Benefits and Limits
Canada has strong reasons to expand trade with Europe, Asia and other regions. More customers can reduce exposure to political or economic shocks in any single country.
However, diversification takes time. Businesses must build distribution networks, meet different standards and develop relationships with overseas buyers. Distance also raises shipping costs and delivery times.
For many industries, the United States remains difficult to replace because of its size and proximity. Canada and Mexico are also linked to it through production systems that cross borders several times.
Key issues for companies include:
- Reliable access to North American customers
- Stable tariff and customs rules
- Compatible regulations across the three countries
- Efficient movement of goods and workers
Hyder Calls for Stronger Continental Ties
Hyder argued that the United States, Canada and Mexico should deepen their economic relationship. That position treats trade diversification and North American integration as parallel goals, rather than competing policies.
Closer cooperation could help the three countries compete with other large trading blocs. It could also support sectors that depend on shared production, including automotive manufacturing, agriculture, energy and advanced technology.
Yet tighter integration carries risks. Canadian businesses may remain exposed to changes in U.S. trade policy, while disputes over tariffs, domestic purchasing rules and border measures can disrupt established supply chains.
The United States-Mexico-Canada Agreement provides the main framework for continental commerce. Its scheduled 2026 joint review has increased attention on whether governments will preserve predictable rules or seek major changes.
Policy Choices Will Shape Investment
Hyder’s warning places predictability at the center of Canada’s trade debate. Businesses can adjust to many rules, but frequent or unclear changes make costs harder to measure.
Governments face pressure to protect domestic industries while keeping markets open. They must also balance economic security with the needs of exporters and consumers.
Canada’s challenge is therefore not simply to trade with more countries. It must create new commercial links without weakening the continental relationships that support jobs and investment.
The next test will be whether North American governments provide enough certainty for companies to approve long-term projects. Clear rules and steady cooperation may determine whether diversification strengthens Canada’s economy or leaves investment waiting on the sidelines.
