Trade confidence edges up as exporters adapt to uncertainty

Global trade is undergoing a period of significant change as new tariffs and trade barriers reshape the operating environment for exporters worldwide. Against this backdrop of heightened uncertainty, Export Development Canada’s (EDC) semiannual Trade Confidence Index (TCI) survey offers timely insights into how Canadian exporters are navigating evolving trade conditions.

The TCI is a composite measure that captures exporters’ views on future domestic and global economic conditions, international business opportunities, and export and domestic sales. Beyond the headline score, the survey sheds light on the key challenges exporters face, their expectations over the next six months and how they’re adapting their international strategies in response to current conditions. Taken together, the TCI provides a forward‑looking snapshot of exporter sentiment, highlighting both areas of resilience and sources of concern across Canada’s export community.

Trade Confidence Index rebounds but remains below long-term average

The most recent TCI survey concluded in early 2026, capturing exporter sentiment at a time when new tariff announcements were reinforcing uncertainty around global trade rules and market access.

In this survey round, the overall TCI score rebounded from a historically low mid‑year reading, rising four index points to 69.7. Despite this improvement, the index remains below its long‑term historical average of 72.4, calculated over the 27 years since EDC began conducting the survey.

While the increase points to early signs of stabilization, it would be premature to interpret this movement as a sustained recovery. Rather than signalling renewed optimism, the results suggest that exporters are adapting to a more uncertain and volatile environment. Sentiment related to domestic and global economic conditions continues to lag other components of trade confidence. By contrast, expectations around export and domestic sales were stronger in this round, reflecting a more positive outlook in areas where exporters retain greater control over outcomes.

Diversification and cautious investment shape exporter strategies

In response to ongoing uncertainty, diversification remains a key strategy for Canadian exporters. Nearly two-thirds (65%) of surveyed exporters plan to enter new markets over the next two years. Diversification also appears to serve as an important risk-mitigation tool: Exporters with broader market exposure reported higher trade confidence than those focused exclusively on the United States market.

Exporters are approaching diversification in a deliberate and measured way. Rather than rapid expansion, firms are prioritizing validation of demand, relationship building and careful assessment of new opportunities. Preferred approaches include participating in international trade shows and virtual expos (35%), engaging new suppliers or partners (34%) and hiring local representatives or distributors (32%).

While the U.S. remains a dominant export destination—more than 75% of respondents currently export there—interest in other regions continues to build. Europe and the Asia-Pacific region remain key areas of focus, with 45% of exporters currently exporting to Europe and 30% to Asia-Pacific markets.

Looking ahead, 28% plan to expand into European markets over the next two years, while 19% anticipate entering markets in the Asia-Pacific region. Among European destinations, Germany (13%), France (12%) and the United Kingdom (12%) are the most frequently cited near-term targets. In the Asia-Pacific region, exporters are prioritizing Australia (8%), Japan (7%) and China (7%).

Beyond trade flows, international investment continues to play an important role in exporters’ global strategies. Nearly 30% of exporters report having foreign investments, and more than half (56%) of them plan to increase those investments over the next six months. The U.S., Mexico, the U.K., China and Germany are the primary destinations under consideration.

For exporters with current international investments, activities include opening international offices (48%), establishing warehouses (39%), forming joint ventures (28%) and building international facilities (25%). These investments signal longer-term commitments to global markets, even amid near-term uncertainty.

Financial pressures and trade barriers weigh on exporters

Despite these strategic adjustments, Canadian exporters continue to face significant financial and non‑financial challenges. Tariffs remain the most frequently cited concern (30%), followed closely by global economic conditions (26%). Exporters also report difficulties finding customers (24%) and navigating complex political and business environments (23%).

Rising uncertainty continues to pressure finances. One‑third of exporters report concerns about increasing business expenses (33%), maintaining profitability (31%) and constrained cash flow (30%). Nearly one‑third (32%) expect to require financing within the next two years to support diversification efforts. Expectations around financing conditions also remain subdued—only 23% anticipate improvements in terms and conditions, while 76% expect conditions to remain unchanged or deteriorate.

Free trade agreements (FTAs) continue to influence exporter decision‑making, although gaps in utilization remain. Among exporters who qualify, 29% report not using available agreements, despite 69% indicating that FTAs affect their business decisions. About 65% of eligible exporters use the Canada-United States-Mexico Agreement (CUSMA), 50% use the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and only 24% of eligible exporters use the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Improving awareness and utilization of FTAs remains an important lever for exporters seeking to manage tariff exposure and reduce trade‑related risks.

The bottom line: Exporter confidence adapts as uncertainty persists

Overall, exporter confidence is adjusting to a more volatile global trade environment. While sentiment has edged up from record lows, it remains below historical norms, with diversification, cautious investment and risk management shaping exporter strategies amid persistent tariff pressures and uncertainty.

This week, a very special thanks to Prerna Sharma, senior economist in our EDC Economics department, and Jennifer Topping, manager, customer and market insights in our customer experience team.

As always, at EDC Economics, we value your feedback. If you have ideas for topics that you’d like us to explore, please email us at economics@edc.ca and we’ll do our best to cover them.