US tariffs are pushing Canada to Europe and China as investors look beyond Washington
Canada is busy reshaping its global trade and investment strategy to respond to continued US trade tensions, with investors and policymakers increasingly looking to Europe and China rather than waiting for a change in Washington.
According to leading audit, tax and business advisory firm Blick Rothenberg, the uncertainty created by US trade policy is accelerating changes in Canadian capital flows and diplomatic priorities.
Melissa Thomas, who is a director in this company, said that Canadian leaders and investors are not willing to remain firm in the hope of the American U-turn policy.
“Canada is not waiting for the US to change its tariffs,” he said. “Canada’s prime minister, Mark Carney, and Canadian investors are clearly looking elsewhere for the country’s economic future – particularly in Europe and China.”
Official data shows that Canadian investors received $15.2bn in foreign equity securities in November, with most of that money directed outside the US. Of that amount, more than $8.9bn flowed into European stocks, marking the highest monthly investment in non-US stocks since April 2022.
Thomas said the figures highlight a deliberate valuation away from the US market.
“This is not just a portfolio adjustment – it reflects a broader reassessment of risk,” he explained. “Continued tax uncertainty has made US exposures unpredictable, while Europe is seen as a stable long-term source of income.”
The Canadian government is moving in the same direction. Thomas pointed to recent interactions between Prime Minister Mark Carney and Chinese president Xi Jinping, which led to agreements to lower tariffs on selected goods.
One of the most notable changes involves electric vehicles. Tariffs on Chinese EVs entering Canada will drop significantly, shifting to a “most favored nation” (MFN) rate – the standard tariff used among members of the World Trade Organization. Under the revised system, Chinese EVs will face a 6.1% tax, on average 49,000 vehicles, compared to the current tax rate of 100%.
“That’s a big letdown,” Thomas said. “It shows a sensible approach from Canada – prioritizing supply, accessibility and trade diversity over compliance with US protectionist policy.”
He added that policymakers in the UK are likely to be watching developments closely, although Britain’s long-standing relationship with the US limits how far it can follow Canada’s lead.
“The UK government will be watching this with interest, but maintaining the so-called ‘special relationship’ with the US means that it is unlikely that Britain will pursue MFN arrangements with Canada beyond those already in place with Washington,” said Thomas.
The growing presence of Chinese electric cars in Western markets is already a contentious issue in Europe and the UK, where manufacturers have warned of being undercut by low-cost imports. Some industry figures have called for minimum pricing procedures to protect domestic producers.
“Only time will tell if Mark Carney is facing the same political and industrial pressure in Canada,” Thomas said. “But what is clear is that US tariffs are accelerating the global adjustment – and Canada is moving determinedly to avoid being caught in the middle.”
