United States President Donald Trump’s import bans and 50-per-cent tariffs are the latest in a relentless series of shocks to Canadian trade. Ottawa is spending billions of dollars on infrastructure to move Canadian resources and agri-food products to global markets and reduce the country’s vulnerability. But a massive opportunity to reduce the country’s risk is largely missing from the national conversation: artificial intelligence breakthroughs, combined with a more digitized economy, radically expand Canadian trade options.
A few years ago, AI models started to be able to complete a wide range of tasks including ones that they had not been trained to do. At the same time, these multi-purpose AI tools became available to anyone, not only those with technical expertise. This was a major breakthrough. Previously AI models could only complete the specific task they had been trained to do and required technical expertise to use.
This AI breakthrough is also a major trade development. All of a sudden, AI tools can now apply to a huge range of economic activities. By using these new capabilities, Canadian firms can create entirely new exports. One example: logging equipment that adjusts autonomously to changing conditions. These multi-purpose AI systems can also make existing exports far more valuable and globally competitive. For example, AI models can now more quickly and accurately identify critical mineral deposits than before.
Digital and AI advances mean that exports now include everything from synthetic data to AI models to the AI and data components of traditional products. Businesses don’t need to ship across borders to deliver these into global markets; they can travel digitally in an instant, including through apps, digital files, and the cloud.
New and improved digital and AI-based tradables create a huge and mostly untapped opportunity for Canada to boost its living standards and withstand shocks. Services delivered digitally represent a $7.5-trillion global market. Digital and AI-based exports are the fastest-growing and highest-value parts of global trade. But Canada is not taking full advantage. This country’s digital services exports account for less than two per cent of the global market. Neither that share, nor the dollar value of those exports, has grown since the AI breakthroughs a few years ago.
In addition to expanding what we can trade, AI advances and digital tools also make it far easier to trade and to scale globally. A business selling unique data feeds or AI-integrated software can deliver it to multiple markets simultaneously and at near-zero cost per extra customer. Even the smallest Canadian business can now use widely available AI tools to instantly make sense of regulations and demand around the world. AI agents can communicate with buyers around the world in most local languages. They can create and execute a 24/7 global marketing campaign, identifying and reaching out to new buyers, and improving outcomes by “learning” what does and does not work. These tasks were all either prohibitively costly or even impossible for smaller firms before, and certainly at this scale, quality, and speed.
Market proximity will always matter for some types of Canadian trade. But as trade costs fall, geography no longer constrains trade the way it once did. It may even be irrelevant for many digital or AI-based products. Meaningfully expanding Canada’s non-U.S. exports may finally be achievable. Businesses can more easily export where demand is strong and fast-growing, wherever that is in the world.
If Canadian exporters can successfully use the latest AI and digital capabilities, the country’s trade mix will naturally become higher-value and faster-growth, and more widely distributed across markets, products, services, delivery modes, and small and large company sizes. Any particular shock is unlikely to hit the whole mix at once. And the rewards could be immediate, rather than waiting for years for new infrastructure to be built.
Canada has major strengths it can leverage, from world-class AI researchers, a highly educated workforce, and a reputation as trustworthy and predictable. We also have industry expertise across everything from mining to clean technologies to multimedia. But Canada will need a new trade strategy to take advantage. Ottawa’s trade diversification strategy focuses largely on traditional exports, barely mentioning digital services and leaving out AI-related trade entirely.
AI capabilities that apply throughout the economy continue to advance at a stunning pace. With each advance comes the potential for new exports, higher value existing exports, and scaling those innovations rapidly around the world. As Canada’s trade options expand, so too does this country’s ability to raise its living standards and withstand the shocks to come.
This piece first appeared in The Hill Times on October 12, 2026, as part of Danielle Goldfarb’s research as one of APF Canada’s 2025-26 John H. McArthur Research Fellows.
Danielle Goldfarb is an expert on trade, real-time data, economics, and public policy. She is a McArthur Research Fellow and a Distinguished Fellow at the Asia Pacific Foundation of Canada, a Senior Fellow at the Centre for International Governance Innovation and the Munk School of Global Affairs and Public Policy, and a Fellow at the CSA Public Policy Centre. She has developed leading-edge research programs and written almost 100 policy papers for Canadian and U.S. think-tanks.
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