As U.S. tariffs roil markets, Canadian businesses build on European ties at world trade fair

In a sprawling exhibition centre in Hanover, Germany, thousands of businesses, including 250 from Canada, are taking part in one of the world’s largest trade fairs focused on industrial technology and innovation. 

Rows of booths and flashy displays are meant to spark conversation, but much of the discussion has been about the U.S. tariffs, which have roiled markets, compromised relations and forced some businesses to accelerate their push for new trading partners. 

“I was scared, I was very nervous, but it has been absolutely overwhelming to see the response and the reception we are getting from European markets,” said Brad Sparkman, president of Ontario-based Innovating Finishing Solutions.

As both Canada and the European Union (EU) take stock of the tariffs levied by the U.S., their most important trading partner, businesses are trying to assess exactly how they will be impacted — and whether they can mitigate some of the economic hit by strengthening other trade relationships. 

On Wednesday, the Trump administration introduced a 20 per cent across-the-board tariff on the EU, and on Thursday morning, a 25 per cent import duty on foreign cars went into effect, including on those made in Canada. 

Cooling relationship with U.S. customers

While Canada appears to have been spared in Wednesday’s announcement, it is already grappling with a 25 per cent tariff on certain Canadian goods and 10 per cent on energy.

Prime Minister Mark Carney has called the tariffs a tragedy for global trade. At the Hanover fair, business people say they have been left confused, dumbfounded — and even hurt. 

Sparkman, whose business is mainly focused on using robotic technology to paint automobiles, fought back tears as he told CBC News about how some of his U.S. contacts aren’t as receptive to working together in the current climate. 

“I feel like we are losing a really good family member,” he said.  “The fact that we can’t continue to do business like we once did, it saddens me.”

Sparkman said he started venturing into the European market a few years ago, because he suspected trade with the U.S. could become more burdensome. 

Now, to try to alleviate the effects of the tariffs, he is considering doing more production in the U.S. and branching out further into Europe. 

His operation, based out of Orangeville and Peterborough, has partnered with the Japanese automation company FANUC and is doing some work in Germany, where cars and brands like Volkswagen, Audi and Mercedes-Benz are the biggest export. 

More trade with world’s 3rd-largest economy

More than 4,000 companies are involved in the Hanover trade fair, and about a quarter of them are from Germany, the world’s third-largest economy. Canada is this year’s partner country for the annual expo, with Canadian companies taking part alongside representatives from the provinces, some municipalities and universities. 

In recent weeks, there was a spike in interest from Canadian businesses looking to take part in the trade fair.  

Jayson Myers, the CEO of NGen, an Ottawa-based non-profit focused on technological development in advanced manufacturing, said that 80 Canadian companies signed up in the past two months, a time when the tariff issues become more dramatic. 

“I don’t think we will ever replace our economic relationship with the United States, but the problems over the last couple of months really showed the urgency … to find new markets, find new customers,” he said in an interview with CBC News in Hanover. 

The EU is Canada’s second-largest trading partner, following the U.S. In 2024, the 27-member bloc exported $84 billion in goods to Canada, while Canada exported $34 billion to the EU. 

The EU-Canada Comprehensive Economic and Trade Agreement (CETA), which provisionally came into effect in 2017, regulates trade between the two partners — but the agreement has not yet been ratified by 10 EU nations due to a number of concerns they hold, including some around food safety and access to public procurement contracts. 

Germany, which ratified CETA in 2022, saw exports to Canada hit nearly $25 billion in 2023. Canadian exports reached just over a third of that. 

Chris Wyatt, head of sales and marketing for Kubes Steel, a metal fabricator based in Stoney Creek, Ont., frequently exports products to the U.S., and he said he believes the States will likely remain a key customer despite the tariffs. He decided to set up a booth at the Hanover fair because he was hoping there could be European demand for his company’s products. 

Wyatt concedes there isn’t much of an opportunity now but said there could be in the future as Europe moves to ramp up its defence spending.

How protectionism could backfire

Hartmut Rauen, the deputy executive director of VDMA, a German association of more than 3,000 mechanical engineering companies, believes that Canada and Germany can collaborate more when it comes to green technology, automation and artificial intelligence. 

While he understands that the U.S. has lost a high proportion of its manufacturing jobs, he said he doesn’t understand the Trump administration’s strategy of trying to increase investment through protectionism. 

In the short term, he said, the U.S. will have to keep importing highly specialized German technology, since its factories can’t produce that now on their own.

But with the tariffs, it will cost more — and Rauen said he thinks there will be a noticeable impact for consumers. 

“It might end in a disaster for the U.S. economy and also for the world economy,” he said. 

When German outgoing Chancellor Olaf Scholz visited the trade fair on Sunday, he warned against the “misguided path of protectionism,” praised Canada and said Germany stands with the “independent sovereign country.”

The visit by Germany’s leader and some of the reaction from the German business community was encouraging to those in attendance, and industry experts hope it could translate into actual trade. 

“There’s not one panel, not one event I attended this week where there was not a strong sign for standing up with [Canada],”  said Yvonne Denz, the CEO at Canadian German Chamber of Industry and Commerce.

“I’m hoping that my phone starts ringing next week and my inbox will get … jammed with inquiries about what we can do in Canada.”