In response to ongoing U.S. trade tariffs, Canada is actively reshaping its global trade and investment strategy, with investors and policymakers increasingly turning their attention to Europe and China rather than waiting for a U-turn in Washington.
According to leading accounting, tax and business advisory firm Blick Rothenberg, uncertainty caused by U.S. trade policy is accelerating a strategic shift in Canadian capital flows and diplomatic priorities.
Melissa Thomas, a director at the company, said Canadian executives and investors are no longer willing to sit idly by in hopes of a U.S. policy reversal.
“Canada is not waiting for the U.S. to reverse its tariffs,” she said. “Canadian Prime Minister Mark Carney and Canadian investors are clearly looking elsewhere for the country’s economic future – particularly Europe and China.”
According to official data, Canadian investors purchased $15.2 billion in foreign stocks in November, with most of that capital flowing outside the United States. Of that, more than $8.9 billion flowed into European stocks, marking the highest monthly investment in non-U.S. stocks since April 2022.
Thomas said the numbers underscore a deliberate rebalancing away from the U.S. market.
“This is not just a portfolio adjustment – it reflects a broader reassessment of risk,” she explained. “Ongoing tariff uncertainty has made U.S. engagement less predictable, while Europe is seen as a more stable destination for long-term capital.”
The Canadian government is also taking action in parallel. Thomas pointed to recent diplomatic cooperation between Prime Minister Mark Carney and Chinese President Xi Jinping, which resulted in agreements to reduce duties on select goods.
One of the most significant changes concerns electric vehicles. Tariffs on Chinese electric vehicles entering Canada are expected to drop dramatically and move to a Most Favored Nation (MFN) rate – the standard tariff that applies between members of the World Trade Organization. Under the revised regime, Chinese electric vehicles will be subject to a 6.1% tariff, subject to a quota of 49,000 vehicles, compared to the current 100% tariff.
“That’s a significant reduction,” Thomas said. “It signals a pragmatic approach from Canada – prioritizing supply, affordability and trade diversification over alignment with protectionist U.S. policies.”
She added that UK policymakers are likely to monitor developments closely, although Britain’s long-standing relationship with the US limits the possibility of following Canada’s lead.
“The British government will be watching this with interest, but maintaining the so-called ‘special relationship’ with the US means it is unlikely that the UK will enter into MFN arrangements with Canada beyond those already in place with Washington,” Thomas said.
The growing presence of Chinese electric vehicles in Western markets is already a contentious issue in Europe and Britain, where manufacturers have warned against price undercutting by cheap imports. Some industry representatives have called for minimum price mechanisms to protect domestic producers.
“Only time will tell whether Mark Carney faces similar political and industrial pressures in Canada,” Thomas said. “But what is clear is that US tariffs are accelerating a global realignment – and Canada is taking decisive action to avoid being caught in the middle.”
