June 9, 2025
Tariff wars, fragmented value chains, mounting protectionism: with the global economy in a state of flux, organizations need to rethink their trade strategies. Is this an opportunity to forge stronger ties with — or reach out to — European partners?
The liberal international economic order depends on three things: the promotion of democracy, free trade and the importance attached to multilateral institutions and organizations. Right now, these foundations are being shaken to their core.
Against this backdrop, the need for resilience is greater than ever. This is the context that shaped the latest Rendez-vous ED x IIDE event entitled “Trade Tensions: Is a Shift Toward Europe Inevitable?” on May 21. Hosted by the International Institute of Economic Diplomacy (IIED) and Executive Education HEC Montréal, the discussion brought together a group of experts, executives and former politicians to examine cross-Atlantic trade relations. The speakers were:
- Pierre Marc Johnson, Adjunct Professor, Department of International Business, HEC Montréal, and former Premier of Quebec
- Henri-Paul Rousseau, Delegate General of Quebec in Paris and Personal Representative of the Premier for La Francophonie
- Daniel Labrecque, Chairman and CEO, DNA Capital
- Véronique Tougas, President, Cambli Group
- Olivier Marcil, Vice President, Communications and Public Affairs Canada, Alstom
- Mélanie Raymond, Acting Chief Economist and Director General of International Economic Relations, Global Affairs Canada
- Marie-Ève Jean, Vice-President, Exports, Investissement Québec — Moderator
Making the most of existing trade agreements
“The European Union is Canada’s second-biggest trade partner in terms of goods and services but also from an investment standpoint,” emphasized Mélanie Raymond, Acting Chief Economist and Director General of International Economic Relations, Global Affairs Canada. Bilateral trade has risen 63%, from $99 billion to $162 billion, since 2016, following the provisional application of the Comprehensive Economic and Trade Agreement (CETA) in 2017.
But as many as 35% of importers of Canadian products don’t take advantage of the preferential tariffs they are entitled to, said Raymond. “Businesses should routinely explain to their customers how to access these preferential rates. If they can save 5% in customs duties, there’s room to tap into these savings, even if it’s only 1%.”
This isn’t limited to European deals, as Canada has 15 free-trade agreements in place covering 51 markets, Raymond added, saying that Global Affairs Canada trade commissioners can offer invaluable support in this regard. “Working with these specialists can increase the value of a deal by up to 20%.”
Collaborating with Europe: A strategic choice
French-based Alstom acquired Bombardier Transportation in 2021 to expand its North American market presence. Olivier Marcil, Vice President, Communications and Public Affairs Canada, stated that it was a strategic choice. Although Europe, where train transport is well established, continues to be the company’s main focus, the demand in North America is expected to grow considerably given the underdeveloped rail network.
But even with a foothold on both sides of the Atlantic, market positioning can be tricky. “In our industry, proximity counts for a lot. Local procurement and manufacturing are what more and more people are looking for,” he explained. However, free-trade agreements have changed the situation, and sometimes not in ways you would expect. There are some companies that manage to win contracts in Canada even though technically, under existing trade agreements, they shouldn’t be able to bid on them. “We’re a small country, and we need to keep our borders open, but we also have to preserve what we have already built with our trade partners through existing international agreements,” he cautioned.
Diversification was the reason Cambli Group President Véronique Tougas decided to look to Europe and the Middle East. “Two years ago, 80% of my sales came from the U.S. I knew that was a risk, even before tariffs came into the picture.” When she took over the reins of the armoured vehicle manufacturer in 2010, the company specialized primarily in cash-in-transit operations, where the market has since undergone significant consolidation. In the past five years, Tougas has stepped up diversification efforts by developing vehicles for law enforcement agencies, while making inroads into the French market. It has been a challenge, especially considering the protectionist policies in this particular field. “We were told that we’d never be able to break into the market if we didn’t have a French partner,” she recounted. “So we approached one of our competitors to see if we couldn’t leverage our respective strengths.” This move turned out to be a good one, paving the way to several contracts in France, as well as on the domestic front.
Shifts like these can take a lot of time and effort for small and medium-sized companies, said Marie-Ève Jean, Vice-President, Exports, Investissement Québec, and moderator of the discussion. “Fortunately,” she added, “we have an entire ecosystem in place to support Quebec businesses as they explore new markets like Europe. And this ecosystem should be utilized without hesitation. That’s the whole reason it exists in the first place.”
Strategic advantages of working together
Businesses often turn to mergers and acquisitions as a way of diversifying their market reach, said Daniel Labrecque, Chairman and CEO, DNA Capital. Statistics show that 352 small and medium-sized businesses in Canada engaged in a trans-Atlantic transaction in the past three years. The success of these transactions depends on several factors, including cultural considerations, which can vary significantly from one country to the next. “It can often be less of a risk to establish a partnership with another company rather than to acquire it. And with all of the geopolitical risks out there these days, it makes sense to work with a company in a stable, predictable country that we have a friendly relationship with.”
Collaboration is also a preferred strategy for Henri-Paul Rousseau, Delegate General of Quebec in Paris. “We are extremely fortunate in that almost every major French company has a presence in Quebec. What I always tell the businesses I advise is to try and become one of their suppliers. Because they could take you with them as they grow.” Likewise, for organizations operating in strategic industries such as defence, security, aerospace, cybersecurity and the energy transition, he encourages Quebec organizations to consider working within a consortium with partners they trust so they can enjoy a stronger position in public markets and fortify their supply chains.
Banking on Quebec’s reputation
Former Quebec Premier Pierre-Marc Johnson said that any disparities in how trade agreements like CETA are applied are due to a poorly defined industrial policy. Something Quebec has long been guilty of, in his estimation. “I think things will change, given the current crisis and the election of a new prime minister in Ottawa who has long pondered these questions and juggled with economic policy.” Johnson also feels that this is an opportunity for Canada to build on its reputation to strengthen trade ties with Europe and reopen talks about certain topics like non-tariff barriers. “As we all know, nothing brings people together better than having a common foe. The adversarial nature of the current U.S. political scene makes this a turning point in the relationship between European countries and Canada,” he said. It is a chance to build a stronger and more resilient economy.
This edition of Rendez-vous ED x IIDE was made possible through the support of Global Affairs Canada, the Caisse de dépôt et placement du Québec, Investissement Québec and the Montreal Council on Foreign Relations.
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