As Canada looks to develop closer economic ties with the European Union (EU), a new report suggests there is billions of dollars’ worth of untapped demand for Canadian goods and services in Europe.
The report, published by TD Economics on Wednesday prior to the Canada-EU summit taking place in Montreal on Thursday and Friday, said current Canadian access to European markets is limited due to regulatory hurdles, geography and other factors.
“These barriers notwithstanding, Canada is well positioned to increase its market share in the EU,” wrote report authors and TD economists Vikram Rai and Rishi Sondhi.
They said this week’s summit is an opportunity to “build momentum and advance cooperation in priority sectors,” as Canada looks to diversify its trading partnerships amid an ongoing trade war with the U.S.
“European demand increasingly overlaps with Canadian capabilities and the two sides’ strategic interest in diversifying economic ties,” the report said.
“The upside for Canadian exports is meaningful. Product-level analysis suggests demand for nearly $60 billion in additional goods exports could exist, under certain conditions, including roughly $50 billion in energy.”
The report listed the defence, energy, critical minerals, digital markets, and financial and other professional services sectors as those with the “largest long-term opportunities” in an expanded Canada-EU trade partnership.
“The biggest gains will need to be unlocked through expanded infrastructure and deeper cooperation to expand investment, improve market access, and build new supply chains in critical areas,” it said.
Trade currently limited
The EU accounts for around five per cent of Canada’s total international goods exports, the report noted, roughly in line with Canadian exports to the U.K. and China. Last year, it amounted to $43 billion worth of merchandise, which was just one per cent of the EU’s total imports.
“Canada’s main exports to the EU include crude oil, aircraft, aluminum, uranium, iron, canola, nickel and diamonds,” the report said.
“Even with this hefty product mix, Canada typically runs a goods trade deficit with the EU. In 2025, it amounted to $50 billion, with Canada importing high-value manufactured products like pharmaceutical products, automobiles and medical instruments.”
Trade, the report argues, is the “most obvious place” for Canada and the EU to deepen their economic partnership, and the report authors said there are two main ways to think about the opportunity.
“The first is to look for products Canada already exports competitively but sells only in small amounts to Europe,” they said.
“The second is to focus on strategic sectors – such as energy and critical minerals – where governments on both sides want to build new supply chains and deepen economic ties, even if trade is limited today.”
Breaking down economic and trade barriers for goods and services is something both Prime Minister Mark Carney and European Commission President Ursula von der Leyen have advocated for as Canada and the EU discuss what a closer relationship will ultimately look like.
This week’s summit may provide some answers, but there’s still a long way to go, the report authors say.
“Much work will remain after the summit: securing capital and buyers, delivering timely approvals, expanding infrastructure, and easing certification and procurement barriers,” they said.
“Ultimately, stronger demand, greater Canadian capacity and better market access – not a one-off diversion of trade – could make Europe a meaningfully larger export market.”
