The "Canada effect": Which European companies could benefit from closer ties?

The US-Canada trade war is driving Ottawa closer to the European Union. European companies are already reaping benefits from these shifting ties in key sectors like defence, aerospace and industrial technology. Canadian Prime Minister Mark Carney received a standing ovation during a recent European Parliament session, highlighting the growing political relationship.

European Commission President Ursula von der Leyen expressed her desire for Canada to become an associate member of the EU, emphasizing a shared focus on defence, energy, technology, critical minerals and the Arctic.

However, there is no established "associate member" category within EU treaties and no template Canada can simply join. To create one, agreement among member states and complex legal negotiations would be required. Ten EU countries, including France and Italy, have yet to fully ratify the Comprehensive Economic and Trade Agreement (CETA) with Canada, which was signed almost a decade ago.

Despite the lack of a formal "associate member" status, trade between the two sides has grown by more than 81% since 2016, reaching just over €130 billion in 2025. Germany and Italy are among the top European exporters to Canada, with German goods exports reaching €12 billion and Italian exports at €6.3 billion. European machinery sales to Canada hit a record €9.5 billion last year, while aerospace sales climbed from €449 million in 2022 to €1.2 billion.

Moreover, Canada has become the first non-European country admitted to procurement under the EU's SAFE defence programme. This move opens doors for European defence companies, such as TKMS AG from Germany and Saab from Sweden, to participate in Canada's large military procurement programmes. European companies like Airbus and Siemens also have a strong presence in the Canadian defence market.

Beyond military equipment, commercial relations are advancing with contracts in the aerospace, defence, and infrastructure sectors. Air Canada has placed an order with Airbus for eight A350-1000 aircraft, and Siemens has invested €97 million in a Canadian research centre for AI-powered battery manufacturing. French groups Keolis, Systra, and SNCF Voyageurs are part of the Cadence consortium selected to develop the planned high-speed railway between Toronto and Quebec City.

Additionally, Canada's reserves of critical minerals such as nickel, lithium, and copper could offer new opportunities for European companies. The European Investment Bank and the Canadian government have signed a letter of intent to explore financing for Canadian critical-minerals projects, which could support European involvement in mining technology, processing, recycling, and battery production.

While a new alliance would need to offer more than reduced tariffs, the potential benefits in government procurement, investment, digital trade, professional mobility, and mutual recognition of standards are still being explored.