Home›Forex›Central Banks›EU protectionism could limit Canada’s export diversifi…

EU protectionism could limit Canada’s export diversification

Canada’s share of exports to the EU rose only about one percentage point since CETA took effect in 2017, with 2025 gains driven mainly by commodities rather than manufacturing.

Reported · Written up by our desk · Central Banks

FXStreet highlights arguments from National Bank of Canada strategist Angelo Katsoras that Canada’s plan to diversify exports away from the United States and toward the European Union is facing growing friction as EU industrial policy becomes more protectionist.

Katsoras points to EU procurement rules, subsidies, tariffs, and local content requirements that increasingly favor European manufacturing, which could push Canadian companies to consider producing locally in Europe even where CETA provides tariff benefits, particularly for public-sector contracts.

The analysis notes that despite CETA starting in 2017, the portion of Canadian exports going to the EU has increased by only about one percentage point, from roughly 4.4% to 5.5%. It adds that increases in 2025 were largely driven by commodity exports such as crude oil, aluminum, and agricultural products, rather than growth in manufacturing exports.

FXStreet also relays Katsoras’s view that Canada’s smaller domestic market reduces its leverage in such a setup, and that any shift toward the EU may depend more on adapting to local production and supply-chain resilience than on securing additional trade agreements.

Latest closeWTI crude $82.40 ▲1.4%

More like this

Sources