The ongoing trade dispute between the United States and Canada is prompting some Canadian businesses to seek opportunities beyond the U.S. market, while also attracting significant foreign investment. Matteo Sgaramella, owner of the Toronto-based menswear company Outclass, has shifted his focus to European markets, attending trunk shows in Paris instead of New York. He reported a positive reception, noting that some European stores are particularly supportive of Canadian products amidst the trade tensions.
"We're kind of seen as the one country that's kind of standing up to the Americans right now," Sgaramella told the BBC.
However, not all businesses have found it easy to diversify. Manufacturing sectors in Ontario, which are heavily integrated with the U.S. economy, are facing significant challenges. A report by the Canadian Chamber of Commerce identified Oshawa, London, and Kitchener-Cambridge-Waterloo in Ontario as particularly vulnerable regions. These cities remain closely tied to the U.S. market, and growth in exports to other countries has been insufficient to offset the broader trade weaknesses and local economic conditions.
Despite these challenges for some sectors, Canada's economy has shown resilience. Foreign direct investment into Canada reached C$96.8 billion in 2025, marking the highest inflow of capital since 2007. The Canadian economy also experienced a strong rebound in the second quarter of 2026, with GDP growth reaching 3.3%, driven by increased exports and domestic investment. These figures have temporarily eased concerns about a potential recession.
To further stimulate investment, the Canadian government is planning to host the first-ever Canada Investment Summit in September. The event in Toronto aims to bring together major investors, CEOs, and business leaders for a two-day summit.