Worldwide, consumers want Canadian products and services. Demand isn’t really the problem; the challenge is in the details. Tariffs, complex regulations, logistics costs, and knowledge gaps keep many Canadian companies from expanding into international markets.
International trade accounts for around two-thirds of Canada’s Gross Domestic Product (GDP).
Small and mid-sized companies often assume they are “not ready” for international trade, because their managers don’t know how to manage these barriers.
But the right information can help you overcome many trade barriers.
Use this overview to get started. If you want a framework to help you apply this information to your own business, access FITT’s Export Vision Board tool.
4 of the top market barriers to exporting for small businesses
1. Complying with customs rules & regulations
One of the biggest barriers is learning the rules and regulations. Not only do you need to learn Canada’s rules, but you also need to learn the specifics for each country you want to export your products to.
Managing trade compliance certainly adds to your administrative burden, but it’s well worth it for many, even when keeping up with two or more sets of laws and regulations. You must learn and comply with rules covering product safety standards, labelling, and customs procedures.
Surveys by the Canadian Federation of Independent Business (CFIB) show that small firms see “complex regulatory frameworks, compliance requirements and the costs associated with shipping” as major obstacles to trading internationally.
Some businesses respond by leaning heavily on customs brokers and intermediaries (about 80% of trading SMEs do so) because they don’t have the in‑house expertise to manage customs and regulatory requirements on their own.
The easiest way to break into international trade is through one of Canada’s 15 Free Trade Agreements (FTAs). These FTAs cover 51 countries and could reach a market of more than 1.5 billion consumers. Since treaties are in place, the risk is lower, and it is easier to find information on doing business with these consumers. You will be able to find much of this information through Canada’s Trade Commissioner Service and by networking within the Canadian small business community.
2. Building a smooth-running supply chain
Once you have a basic understanding of some of the rules and regulations for imports and exports in your industry, you need to apply that knowledge to building your supply chain. This basically covers everything from manufacturing your product to getting it into your customers’ homes.
Building a “smooth” supply chain today is less about chasing the absolute lowest cost and more about building a resilient foundation.
If your business masters a few fundamentals, it is easier to adapt if you need to change vendors, partners, or just about anything else.
There are many specific things to consider. For example, shipping costs were identified as the single biggest challenge for SME exporters, now affecting 66% of firms, with currency fluctuations and duties and taxes close behind, according to the Canadian Federation of Independent Business (CFIB)
Canadian businesses that are able to front-load inventory and diversify suppliers are better able to stay ahead of supply chain disruption. For exporters, the message is clear: take time to invest in relationships and the tools you need to manufacture your product and reliably move to your customers.
If this seems daunting, consider that other Canadian businesses have gone through this before, and Canada’s network of economic development organizations can help.
For example, Nova Craft Canoe was a thriving domestic small business, bringing high-quality boats to the Canadian recreational market. They were able to expand, reaching new markets in Denmark, Finland, and Germany. They formed strategic partnerships and worked closely with advisors at Export Development Canada (EDC). Credit insurance reduces the risks of doing business with suppliers and buyers in other countries, freeing Nova Craft Canoe up to find the best partners.
3. Developing language and culture competency
In theory, international markets have never been more open. In practice, exporters and importers have a steep learning curve navigating tariffs, technical rules, and shipping bottlenecks. Yet, language and cultural barriers are among the toughest challenges to overcome.
Often, we focus on more objective and tangible barriers like complying with regulations, pricing that includes tariffs, and supply chain management. Yet, one of the toughest challenges is understanding the culture of your new markets and finding trustworthy translation support (beyond AI) if these consumers speak another language. Packaging, marketing, and documentation all need to appeal to your audience.
Storkcraft is one of the fastest-growing baby and children’s furniture companies in North America, including Mexico. Their marketing team includes staff from Mexico, Colombia, and Peru who offer crucial cultural insights. As your business grows, you will likely need additional staff with specialized expertise.
4. Keep up with taxes and tariffs
Tariffs, duties, and border taxes can change quickly, and that uncertainty hits exporters right in the margins. Historically, the United States has been Canada’s biggest trading partner. Sudden increases or new retroactive charges can make a previously profitable contract unviable practically overnight, especially for smaller businesses.
Uncertainty over the changing tariffs and environment may discourage smaller Canadian businesses from exporting their products.
Despite the changing environment, there are still opportunities for growth in reaching consumers in the U.S. or the many other nations with which Canada has trade relationships with.
Companies like Nova Craft Canoe and Storkcraft work closely with the Canadian Trade Commissioner Service and use resources like the Tariff Finder to ensure they operate with the most up-to-date information.
If you are used to only doing business in your local community or domestically, you will have a steep learning curve when you expand into international markets. Keeping up on taxes, tariffs, laws, and regulations for two or more countries is another ongoing challenge. You can start from a position of strength by completing practical, execution-focused international trade training that builds real-world trade competence beyond high-level theory. If you are already exporting or importing products, the right training will help you fine-tune your approach.
You can also connect with knowledgeable and experienced advisors, such as CITPs, who can support your expansion plans and help you navigate a complex trade environment.
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