Services proving to be the bright spot in Canada’s international trade performance
Services are a key driver of Canada's global trade and addressing "policy coherence across education, immigration, digital infrastructure, trade and investment" is essential if the country wants to compete internationally, says the federal government’s annual State of Trade report.
Canada’s growing strength in international services reflects its highly educated workforce, digital connectivity, and trusted institutions, according to the report by the global affairs department. These advantages have helped Canadian firms expand through digital exports, education, services embodied in goods and, most importantly, commercial operations abroad.
“As services continue to account for a rising share of Canada’s international commercial activity, understanding and addressing these drivers and challenges will remain central to sustaining Canada’s competitiveness in the global economy.”
Services exports reached $240 billion in 2025, nearly tripling in value since 2010. They now account for almost one-quarter of Canada’s total exports.
The report says services have accounted for all of Canada’s $50 billion increase in exports since 2022.
Services are also less concentrated in the U.S. market than goods. Just over half of Canadian services exports went to the United States in 2025, compared with more than 70% of goods exports.
The report identifies digitally delivered services as a particularly fast-growing area. These include computer and information services, financial services, professional services, research and other activities that can be delivered across borders electronically.
Digitally enabled services accounted for 13% of Canadian exports in 2025 and have grown by 200% since 2010. By comparison, goods exports grew 92% over the same period.
The report says services have continued to grow despite disruptions to international trade, including tariffs, wars and changes in commodity prices.
“Commercial services—such as computer, information, and financial services—in particular have proven resilient in spite of downturns,” the report says, noting that these activities generally face fewer tariffs and border-related barriers than goods.
Canadian exports to countries other than the United States increased 11.1% in 2025, while exports to the U.S. fell 3.7%. The share of Canadian exports going to non-U.S. markets reached 32.8%, the highest level in more than four decades, according to the report.
In a message accompanying the report, International Trade Minister Maninder Sidhu pointed to the shift as one sign of Canada’s ability to adjust to changing trade conditions. “These numbers show that the world continues to value Canada as a strong, fair, predictable and dependable trade and investment partner,” he said.
Foreign direct investment into Canada reached $93 billion in 2025, its highest level in a decade. Canadian investment abroad fell to $73.8 billion. As a result, foreign investment into Canada exceeded Canadian investment abroad for the first time since 2013. The United States remained the largest source of foreign investment into Canada, accounting for 56.9% of inflows.
