As Canada navigates a new economic landscape following Prime Minister Justin Trudeau’s resignation, the focus shifts to how the upcoming leadership will address evolving trade dynamics. With a potential pivot towards markets like Vietnam, the implications for Canadian exporters and broader trade relations are gaining traction.

Following Prime Minister Justin Trudeau’s resignation, observers have raised concerns about Canada’s path in this new era of trade conflict under the U.S. President Donald Trump’s administration. The primary concerns revolve around how the next Canadian leadership will navigate its trade policy, which will directly impact the country’s economy.

Amidst the confusion, the entrance of Mark Carney, with his extensive background in finance and economics, as the next prime minister has brought clarity to the forthcoming economic trajectory of Canada. Carney has made clean energy, climate policies, and economic prosperity central facets of his campaign, emphasizing that a low-carbon approach will enhance Canada’s competitiveness. Many also believe his firm stance as a “liberal globalist” will navigate the North American country through the volatility of current trade tensions with the U.S.

Canada’s trade trajectory after Trudeau

Although Carney has yet to announce his administration’s official economic and trade strategies, it is anticipated that Canada will seek to diversify its export destinations to lessen dependency on volatile U.S. cross-border trade relations and establish a more sustainable trade network. At the same time, Canadian exporters may explore alternative markets to mitigate risk, potentially reshaping established trade patterns.

Earlier this year, Ashley Kanary, the Director of Global Agri-Food at Export Development Canada (EDC), highlighted Canada’s strategy to broaden its markets beyond the United States. This approach focuses on agricultural and processed food products, particularly aiming to boost exports to the Indo-Pacific region while enhancing production and trade activities. EDC is currently executing this strategy in Southeast Asia, particularly in nations that have bilateral and multilateral free trade agreements with Canada, according to Kanary.

Prospect of Vietnam-Canada trade relations

These dynamics are set to benefit emerging markets like Vietnam, where opportunities for new business and investment are plentiful. From EDC’s perspective, Vietnam emerges as a key destination for Canada’s export expansion strategy, as Canadian enterprises view the country as a gateway to ASEAN and the Asia-Pacific region. The appeal is further heightened by the fact that Vietnam is one of the few ASEAN countries that participate in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) alongside Canada.

Furthermore, Vietnam’s ongoing investments in infrastructure, including seaports, roads, and telecommunications, establish a strong basis for Canadian companies looking to invest in the country. This growth in infrastructure makes Vietnam a prime location for exporting to regional markets or receiving imports.

Vietnam-Canada trade flourished in 2024
Canada’s official data indicates that Vietnam reported a trade surplus of approximately US$9.9 billion with Canada, whereas Vietnam’s statistics show a surplus exceeding US$5.5 billion with Canada. Vietnam remains the seventh largest import partner for Canada among the top 10 trade partners. Among ASEAN nations, Vietnam is Canada’s most important source of imports, making up almost 45 percent of the total imports from the region.

Vietnam’s key exports to Canada

According to Vietnam Customs, Vietnam’s exports to Canada in 2024 surpassed US$6.37 billion, a 13.5 percent increase compared to the same period in 2023. Meanwhile, Canadian authorities recorded a total value of US$10.6 billion for Vietnamese exports to Canada,  reflecting an 8.2 percent rise from the previous year.  This achievement signifies the first time that Vietnam’s exports have crossed the US$10 billion threshold in trade with Canada.

Noteworthy trends in the two-way trade

Vietnam as a rising production base for Canadian businesses
Canadian enterprises previously relocated their production to countries such as China to capitalize on reduced costs prior to exporting to North America and Europe. In recent years, Vietnam has emerged as an attractive alternative production hub, presenting opportunities for exports to Indonesia, the Philippines, and other markets within the region.

Surge in Vietnam’s iron and steel exports to Canada
Notably, iron and steel exports from Vietnam to Canada substantially increased in 2024 compared to 2023, with a 25 percent increase in metals and a 30 percent rise in iron and steel products. This shift is due to Canada’s tariffs on all iron and steel products imported from China, prompting Canadian buyers to seek alternative sources.

The sudden growth is noteworthy, for it takes place during the low import season of the Canadian market, which occurs in the first and fourth quarters every year. This shows that the Canadian market is likely to start preparing to stockpile goods to deal with the possibility of the Trump administration imposing tariffs, and the Canadian government may take similar measures.

New potentials in the agri-food sector
Canada possesses competitive advantages in global markets, especially in the areas of wheat, peas, grains, and barley. Canadian seafood, including crab, lobster, and salmon,  also ranks among the best worldwide, enhancing its competitiveness. Since agricultural products from Vietnam and Canada complement each other rather than compete, strengthening bilateral ties in agricultural production and processed foods is anticipated to create significant opportunities for both economies, particularly in trade and food security.

Nathan Andrew Nelson, the Director of Indo-Pacific Innovation and Chief Representative for EDC in Vietnam, anticipates an increase in the number of Canadian companies that will initiate their operations in Vietnam. These enterprises perceive Vietnam not solely as a manufacturing hub but also as a prospective processing center for the agri-food sector.

Road ahead
In the wake of Prime Minister Justin Trudeau’s resignation, Canada is expected to continue expanding its trade ties with emerging markets, such as Vietnam. The Southeast Asian nation has become an important trade partner for Canada, providing access to the lucrative ASEAN market and the broader Asia-Pacific region. As both countries explore new avenues for collaboration, their economic partnership is poised for continued growth.

Source: Vietnam Briefing

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