In a world of shifting trade alliances, fractured supply chains, and digital dependence, Canada’s economic future demands a hard reset. For decades, Canadian small and mid-sized enterprises (SMEs) – which make up 99.8% of all employer businesses and employ over 88% of the private workforce – have played a supporting role in a system designed elsewhere—reliant on U.S. buyers, platforms, logistics, and procurement channels. But that model, while always precarious, is now cracking under the weight of American protectionism and “Make in America” policies.
In the wake of trade becoming a geopolitical lever, Canada must make its own industry more competitive, connected, and discoverable.
The Trade Dependence Dilemma
Over 75% of Canada’s exports go to the United States—and over 50% of its imports come from there. This deep economic coupling with a single trading partner has long been seen as efficient, but it now poses strategic vulnerabilities.
Recent U.S. policies—such as the Inflation Reduction Act, Buy American mandates, pandemic-era export controls and now threats of tariffs—have repeatedly caught Canadian industries off guard, often sidelining Canadian firms from supply chains or public procurement.
This asymmetric dependence has led to:
- Rising input costs for Canadian manufacturers, especially in auto, clean tech, and construction sectors.
- Supply-side shocks that impact domestic availability and pricing of key goods, from semiconductors to building materials.
- Export disruption in sectors like forestry, agri-food, metals, and aerospace, where U.S. policy shifts alter demand unpredictably.
- Delayed investment and job losses, particularly in SMEs that lack the buffer to absorb sudden cost or policy shocks.
- Reduced competitiveness of Canadian firms when U.S. suppliers or buyers prioritize domestic alternatives.
In this context, decoupling doesn’t mean abandoning trade with the U.S.—it means building complementary strength through diversified markets and a resilient domestic base that can “make in Canada and sell in Canada.”
Canada’s heavy reliance on a single market isn’t just risky—it’s untenable without a robust domestic industrial strategy and the infrastructure to ensure that anything made in Canada can be profitable, competitive, and scaled.
Key Challenges Facing Canadian Industry Today
1. Suppliers are invisible to domestic buyers
Canadian retailers are increasingly seeking domestic alternatives as U.S. supply chains face rising constraints. Yet many local manufacturers—especially SMEs, Indigenous producers, and regionally distributed suppliers—remain disconnected from this demand. A 2023 BDC report found only 20% of Canadian SMEs had integrated their digital presence with procurement or discovery platforms.
Consequences for Canadian resilience:
- Canadian buyers rely on foreign platforms or intermediaries for sourcing.
- B2B procurement remains inefficient and fragmented.
- Smaller manufacturers and Indigenous enterprises miss out on demand.
- Potential reshoring of supply chains is constrained by poor market visibility.
2. Digital tools exist, but ecosystems are fragmented
Many SMEs have adopted platforms like Shopify, Instagram, Amazon, etc—but these tools don’t talk to each other. There’s no interoperability across commerce, logistics, finance, or procurement systems. According to a 2023 ISED report, fewer than 30% of SMEs had automated integrations across more than two business functions.
Consequences for Canadian resilience:
- Businesses struggle to scale or serve B2B demand efficiently.
- Time and cost barriers discourage participation in national supply chains.
- Canada’s digital economy remains fragmented, reducing competitiveness.
- SME innovation is stifled by overhead and duplication of effort.
3. Logistics systems favour large players
Shipping rates and logistics integrations often favour larger businesses due to volume-based pricing and platform control. Small businesses in remote or regional areas pay disproportionately higher costs. A 2022 C.D. Howe Institute study noted SMEs can pay up to 30% more per parcel than enterprise-scale shippers, even when selling in the same region.
Consequences for Canadian resilience:
- Smaller businesses are priced out of national or export markets.
- Regional suppliers face barriers to market access.
- Canadian logistics innovation is centralized and less inclusive.
- Trade imbalances worsen between urban centres and rural economies.
4. Procurement is disconnected from Canada’s digital and industrial goals
Public procurement remains an untapped lever for building industrial capacity. While governments and institutional buyers control enormous demand, procurement systems are often fragmented, outdated, and difficult for smaller vendors to access. Worse, they’re frequently misaligned with national economic priorities.
Despite commitments to supplier diversity and innovation, Canada’s public procurement disproportionately favours incumbent or foreign-affiliated vendors. According to a 2023 Auditor General report, only 11% of federal contracts went to SMEs.
Consequences for Canadian resilience:
- Public procurement fails to act as a catalyst for domestic innovation.
- Smaller, emerging suppliers—including Indigenous businesses—are excluded from reliable growth pathways.
- National economic goals (e.g., clean tech, digital sovereignty, regional development) are weakened by siloed procurement processes.
- Domestic firms lose the chance to scale through consistent, mission-aligned demand.
5. Innovation is constrained by digital gatekeepers
Dominant digital platforms (e.g., Amazon, Meta, Google) control search, sales, and customer relationships—often at the expense of Canadian product visibility and profit margins. In a 2024 Canadian Chamber of Commerce survey, 48% of SMEs reported platform fees or policies were a barrier to profitability.
Consequences for Canadian resilience:
- Local businesses remain invisible in the broader digital economy.
- SMEs face rising costs to access markets controlled by foreign platforms.
- Indigenous and regionally distributed firms are sidelined by rigid platform algorithms.
- Domestic market potential is lost to overseas aggregators who extract value without reinvesting.
Digital Isn’t the Problem – Digital Ineffectiveness Is
A 2022 BDC study found that 91% of Canadian SMEs have invested in digital technology, yet only 1 in 20 uses it effectively. That same year, only 60% had websites, and just 34% analyzed customer data. A 2025 ISED review noted that while 85% of SMEs are now online, fewer than 46% have a comprehensive digital strategy.
In other words: the tools are present, but disconnected. Canadian SME businesses are building in silos, not systems.
The Open Network Solution
Canada’s digital strategy must evolve from “get online” to “get connected.” Without shared infrastructure—like interoperable directories, modular logistics, and federated discovery—Canadian businesses remain digitally invisible and commercially isolated.
Open networks change this by making the digital economy findable, connectable, and scalable.
| Symptom | Cause | What an Open Network Enables |
|---|---|---|
| Websites with low traction | No common protocols for discovery | Federated search across platforms |
| “No Canadian product found” | No unified supplier registry | Shared B2B directories with API integration |
| Fragmented software and tools | Incompatible systems; no interoperability | Modular plug-and-play infrastructure across tools |
| Idle manufacturing capacity | Hidden B2B demand | Real-time procurement discovery |
| High fulfillment costs for SMEs | Logistics systems that scale poorly for small businesses | Open logistics protocols with shared access to routes and services |
| Limited access to customer insights | Data lock-in by platforms | Data portability and access to shared analytics infrastructure |
Open networks don’t replace existing tools—they connect them. They enable Canadian SMEs to compete and collaborate in a more open, inclusive, and efficient economy.
The Open Network Advantage for Canada
Ottawa’s response to U.S. protectionism and digital platform dominance has been largely reactive. A strategic response requires more than subsidies or innovation grants. It requires building the infrastructure for Canadian firms to compete on fair terms—and win.
To truly “Make it in Canada,” Canada needs to:
- Build interoperable digital infrastructure, not just websites and portals
- Open up procurement systems so SMEs can actually compete
- Fund and govern open digital infrastructure as a public good
- Embed discoverability, interoperability, and inclusion into every industrial and digital policy
The future of Canadian industry isn’t just about where it makes things—it’s about how they connect, discover, and scale. It’s time Canada invested in digital roads alongside physical ones. Open networks provide a chance to turn Canada’s local capacity into global competitiveness—by making Canada’s economy more discoverable, more connected, and more resilient.
SANDEEP MAHAJAN 
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