When the U.S. sneezes, Canada catches a cold. The saying has been used before, but it feels more relevant than ever today. 

Over 50 years ago, Mitchell Sharp, then Canada’s Secretary of State for External Affairs, warned that Canada was too vulnerable to its closest neighbour. At the time, there was growing public concern that Canada’s economic and cultural identity was at risk of being absorbed into U.S. policies. In response, Sharp wrote the 1972 policy paper, Canada-U.S. Relations: Options for the Future. He outlined three possible paths forward: maintain the status quo, deepen integration with the U.S., or explore stronger trade and economic relations with other countries. He called the latter strategy “The Third Option”, but it never materialized. 

Half a century later, with U.S. President Donald Trump back in the White House and the threat of new tariffs, the cold Canada is about to catch could become more serious if we don’t take action.

That was the message delivered by Dan Herman, keynote speaker at Tuesday night’s CEO dinner hosted by Communitech at Bingemans in Kitchener. Herman, who spent 15 years researching economic policy and innovation, co-founded the Centre for Digital Entrepreneurship and Economic Performance to advise governments and businesses on global competitiveness.  His work spans both the private and public sectors, having previously led Canada’s Inclusive Innovation Agenda at Innovation, Science and Economic Development Canada.

“We should be annoyed not that we ignored Mitchell Sharp but that we ignored three waves of economic change,” he said. 

Those waves included the economic growth of the 'Four Asian Tigers' (Japan, Singapore, Hong Kong and South Korea), China’s post-World Trade Organization (WTO) economic growth, and now the rapidly growing startup ecosystems in emerging markets around the world. He cited Nairobi, Kenya, as an example, with its population of 5.5 million and Africa’s total VC funding of $2 billion last year.

“You have a world that’s been pigeon-hold as being poor,” he said. “Suddenly, now they’re proving they’re just as smart as us. They’re building innovative products and they want to sell them to the same people we want to sell to.”

Herman also directed and produced Magnetic Cities, an 18-part documentary series on the most innovative cities around the world for startups. Through his film projects, he gained firsthand insights into how tech ecosystems are growing beyond the usual hotspots. 

Herman said emerging markets have exploded and global competitors have found new opportunities, but Canada has stayed in the same trade patterns, which leaves businesses exposed to U.S. economic turbulence.

The CEO dinner also highlighted how Waterloo Region’s tech community is no stranger to challenges or finding ways to turn them into opportunities.

“We celebrate each other’s successes, and when times get tough, we rally. That’s who we are,” said Jennifer Gruber, Interim CEO and CFO at Communitech. “We need everyone in this room to rally, be present, give back and help connect. Whether you’re a founder, a partner, an investor, or a policymaker, your involvement is needed more than ever to keep building the future we want to see.”

The stakes are high for many of the tech leaders at the event, as many of them prepare for rising costs, supply chain disruptions and the challenge of scaling beyond North America. Herman presented a playbook for surviving and growing in an unpredictable trade environment by outlining five actions for Canadian businesses and institutions.

First, he said post-secondary institutions have an important role in creating ‘soft landings’ for entrepreneurs and offering the resources and networks needed to expand globally.

Second, he encouraged Waterloo Region’s three post-secondary institutions to take advantage of the global networks of international students to create stronger relationships.

Third, he called for startup incubators and accelerators to strengthen partnerships with international counterparts to facilitate better cross-border collaboration and market access.

Fourth, for parents investing in their children’s education, Herman encouraged a shift in mindset. Instead of just saving for a degree, families should think about international internships, language programs and global work placements as important career-building experiences. 

“It’s not enough to just assume they’ll go to school,” he said. “They need to understand the world, make money out there, and bring it back here.”

And finally, Herman turned his attention to the tech leaders in the room.

“Wake up in the morning and think of two or three places that are off the map,” he said. “For some reason, your product might fit there. Take advantage of all the supports available to entrepreneurs.”

Instead of defaulting to the U.S., companies should actively explore new regions where their products or services might gain a competitive edge and meet growing demand,  he said. That means researching market demand, engaging with international trade networks, and taking advantage of government support for global expansion.

“It’s not in our nature to pick up and say, ‘Here’s the easy path, and here’s the difficult one. I’m going to choose the difficult one,’” he said. 

Herman closed his speech with the reality check that Canada isn't the only country trying to attract talent and capital. 

“These are markets waiting for us to be discovered,” he said. “The problem is, we’re late. We’re really late. In all these markets, I meet everybody else, except Canadians.”

The evening also featured remarks from Tim Rollins, Waterloo Region Office Managing Partner and Tax Account Leader, Technology, at EY, who said we must double down to reinvigorate and embrace our entrepreneurial spirit, passion and leadership position and continue to shine a light on thousands of visionary Canadian entrepreneurs who are changing what’s possible for our country and the globe. 

Sean Sullivan, Managing Partner at Gowling WLG’s Waterloo Region Office, Communitech’s newest foundational partner, said these are challenging times, and they’re hyper-focused on the needs of clients in the community.

Both EY and Gowling WLG have provided expert guidance to tech leaders at a series of recent events at Communitech focused on supporting tech leaders as they prepare for the impact of tariffs.