Canada’s exports to the United States have significantly fallen since the start of this year, showing it will be difficult for Canadian companies to completely replace American demand even though there has been a noticeable pickup in

“Our membered manufacturers are looking for new customers and some of them are finding them,” he said. “But we have to keep in mind that roughly two thirds of what we produce and sell to the U.S. are not finished consumer goods; these are intermediate goods, so the parts, ingredients and components used in U.S. manufacturing processes.”

Despite having 15 free trade agreements with 51 countries, nearly 80 percent of all Canadian exports are sent to the U.S., according to Royal Bank of Canada.

Between January and April this year, Canadian exports to the U.S. fell by 26 per cent, according to tax and business advisory firm Blick Rothenberg Ltd.

“The most dramatic and immediate impact of U.S. President Donald Trump ‘s tariffs has been a severe disruption to Canada’s export performance,” Melissa Thomas, director at Blick Rothenberg, said.

She said this drop in exports represents “one of the most significant trade contractions in recent Canadian economic history.”

In January, trade between Canada and the U.S. surged as companies attempted to pull forward inventory ahead of Trump’s tariff announcements. Greer said with some exceptions, most of that inventory has run out.

As it stands, there is still a 50 per cent levy on Canadian steel and aluminum, a 25 per cent tariff on autos and a 35 per cent levy on goods not in compliance with the Canada-U.S.-Mexico Agreement (

CUSMA ). But Greer said even some manufacturers that are exempted from tariffs under CUSMA are starting to see a drop in demand from their U.S. clients due to the uncertain trade policy environment.

“They’ve heard from a U.S. customer who has been told by their parent company to try to just domestically source something they bought from a Canadian supplier for many years,” he said. “To shore up against potential trade or tariff changes, or future policy changes from the U.S. administration in the short term.”

In June, exports to the U.S. were down 12.5 per cent compared to a year ago, but exports to other countries rose 14.7 per cent.

In March, Export Development Canada launched its trade impact program to help Canadian exporting businesses adapt to the new global trade environment. The crown corporation earmarked $5 billion over two years for the program.

Todd Winterhalt, senior vice-president of international markets at EDC, said companies of all sizes were initially in a wait-and-see approach because they were hoping the tariffs would be resolved in the short term. But he said they have now received about 800 inquiries from exporters and investors seeking financial assistance from the EDC in pivoting their businesses.

“We have seen 18 signed transactions for about a quarter of a billion dollars,” he said.

Winterhalt said EDC has also had two million visits on its site this year when it comes to tariff-related and market diversification information products. He said a pivot to other markets can be difficult for many businesses and the dependence on the U.S. market will be tough to replace, but there are a number of opportunities to be found in the European and Asian markets.

“For most of the countries in Europe and a lot of the key emerging markets in the Indo-Pacific, we have trade agreements in place and great relationships already there,” he said. “Canadian exporters and investors can really leverage those to accelerate that (trade diversification) process.”

Prime Minister Mark Carney has said trade-impacted Canadian industries can sell more in the domestic economy and has promised to prioritize Canadian materials in major infrastructure projects and break down

interprovincial trade barriers . “We’re not going to be able to replace all the U.S. demand and how interconnected our manufacturing sector is by simply diversifying or by British Columbia companies buying more from Ontario companies,” Greer said. “All that said, we do think there is a lot of slack in the Canadian economy around the overall domestic policy landscape.”

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But, ultimately, he said, “The only way to fix our U.S. problem is to fix our U.S. problem.”