China Deal, CUSMA threats, and internal trade.

About this edition

Illuminating possibilities.

Mark Carney’s address at World Economic Forum has been all the talk this past week, signalling a change in Canada’s geopolitical strategy and marking the start of a reposition, in both ideology and action, on the world stage. 

In today’s edition, we’ll zoom out to take a look at Canada’s broader mindset, then narrow it down to how this will affect small- and mid-sized businesses. From a strategic alliance with China and  to new data on AI integration in Canadian businesses, our newsletter aims to inform, illuminate, and inspire growth in the face of global uncertainty.

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Canada-China deal

The “Carney Doctrine” sets off.

Mark Carney kicked off the year by putting his 'Carney Doctrine' to work, visiting China to seal a deal that officially begins Canada’s shift toward global trade diversification. In an effort to lessen US reliance, Canada’s strategic alliance with China, built on a system of ‘shared values and interest’, includes:

EV influx: Canada will be importing 49,000 Chinese EVs (3% of the total new vehicle market) with a favourable tariff rate of 6.1% and an expected import price in 5 years of less than $35,000. No matter how you see it, this could lower EV costs for all Canadians and increase market competition.

Agri-food: A preliminary agreement (effective March 1, 2026) slashes Chinese tariffs on Canola seed from 85% to 15%, alleviating access to a $4 billion market. Furthermore, the Government of Canada has secured exemptions on anti-discrimination tariffs for canola meal, lobster, and peas through year-end.

Investments & opportunities: Canadian businesses should not take this deal lightly, as China is Canada’s second-largest export market ($21.11B in 2024, or 3.9% of total exports). With the Government of Canada aiming to increase exports to China by 50% by 2030 via investments in clean energy, technology, agri-food, wood products, and other sectors, this could create opportunities for SMBs across the nation while limiting our country’s reliance on US trade, which accounts for 77% of our total exports.

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CUSMA renegotiations

Canada is in the crosshairs.

With the Canada-US-Mexico Agreement (CUSMA) up for review this year and pre-negotiations underway, Trump’s tariff threats over Carney’s decisive Davos speech have led to heightened tensions in US-Canada relations.

What’s at stake: CUSMA has long been a free trade agreement that has benefited Canada in more than one way, with virtually tariff-free access for 90% of our exports to a market of over 500 million people. 

The Canadian SMB market reaps the rewards too, as CUSMA prohibits customs duties on digital products, reduces duty-free and tax rates on imported supplies or samples, and streamlines trade regulations through a single, accessible electronic portal, helping organizations without robust legal departments.

What could go wrong: Analysts and economists have predicted a positive outcome for the talks this year, but with Carney’s pivot with Canada on the global stage and a course correction to lessen ties with the US, Canada-US relations may continue to sour.

Trump’s renewed tariff threats dampen the outlook for CUSMA renegotiations. Tariffs on US-bound exports remain at a manageable 5.9%; however, a tariff hike could cause serious damage to Canada’s economy.

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New interprovincial trade rules

Tearing down provincial walls.

In other, more local news, the federal Government of Canada has officially recognized the Free Trade and Labour Mobility in Canada Act and the Building Canada Act at the start of the year, following the signing of the Canadian Mutual Recognition Agreement (CMRA) between all provinces in December 2025. This is in pursuit of creating a unified Canadian economy rather than 13 siloed ones.

The government’s promise: With the agreement signed and the legal ground to proceed, federal and interprovincial barriers to free trade will diminish. The Canadian government projects an increase of $200B in national GDP over a decade, as $520B worth of goods and services moving across provincial and territorial borders each year are affected.

Tread cautiously: Despite the progress, this isn’t the first time the federal government tried to enact an interprovincial free trade agreement.The 1995 Agreement on Internal Trade (AIT) was the first major attempt to create a free trade zone, but failed to include all sectors of the economy. Furthermore, the 2017 Canadian Free Trade Agreement (CFTA) has faced pushback, especially regarding barrier-free alcohol trade.

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AI adoption: the data

AI is the great-equalizer

The world of AI isn’t slowing down, yet small and mid-sized businesses are still falling behind. We saw a surge in AI adoption throughout 2025, and that trajectory is only steepening. For context, the number of businesses expecting to invest in AI integration jumped from 11.5% in 2024 to 17.9% in 2025.

As mentioned in our previous edition, we’re entering a period of slow economic growth, hovering at 1.0%. Big corporations are already using AI to defend their margins during this time, and now SMBs are being given the opportunity to follow suit.

Off-the-shelf solutions have made AI more accessible than ever. Tools can now handle a range of tasks, including inventory management, customer service, forecasting, and administrative work. Custom coding or expensive infrastructure is becoming a barrier of the past, marking a defining moment for small and mid-sized businesses to take advantage of innovation and get ahead of the competition.

We suggest you discover and educate yourself and your staff on how to use AI for repetitive tasks first and upskill your team to do the same. Invest in platforms that can speed up operations and internal processes, so once you have sufficient capital, you can integrate AI into more complex capabilities.

Because, as Nvidia CEO Jensen Huang famously stated: “AI is the greatest equalizer of people the world has ever created.” The tools are here; the question is whether your business can pick them up in time and level the playing field.