Doing business in Japan

Trade and economic relations between Canada and Japan have been steadily expanding. Japan is the world’s fourth-largest national economy and one of Canada’s most important economic and commercial partners. The foreign direct investment (FDI) stock from Japan into Canada is valued at $48.2 billion (2024), making Japan Canada’s second-largest source of FDI from the Indo-Pacific and fourth largest overall. Japanese subsidiaries and affiliate companies operating in Canada employ thousands of Canadians and support numerous communities.

The presence of Canadian business in Japan is significant and diverse, notably in the automotive, information and communications technologies (ICT), financial services, forestry, agri-food, and energy sectors. The stock of Canadian direct investment in Japan was valued at $3.8 billion in 2024. Japan is Canada’s fifth-largest trading partner in terms of bilateral merchandise trade (2024).

Canada’s exports of merchandise to Japan totaled $15 billion in 2024, while imports from Japan totaled approximately $21.1 billion. Mineral fuels and oils (notably, coal and liquefied propane gas), minerals (copper, iron ores and nickel), agricultural products (notably, canola seed, wheat, pork, beef and soybeans), pharmaceutical and forest products were among Canada’s largest exports to Japan. Vehicles, machinery and equipment, and scientific and precision instruments (mainly for medical use) were Canada’s largest imports from Japan.

Agri-food trade continues to play an important role in the bilateral relationship. Japan is Canada’s third-largest agri-food and seafood export market, with exports totaling approximately $4.9 billion in 2024. 

Canada and Japan also collaborate closely in the implementation and expansion of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP is a free trade agreement which eliminates or reduces tariffs on most key Canadian exports to Japan, including agriculture and agri-food, seafood, forestry, and metals and mineral products. 

• Advanced manufacturing: Japan’s growing composite materials sector and focus on smart manufacturing create opportunities in chemicals, plastics, industrial machinery, and robotics.
• Aerospace: As the 6th largest aerospace market, Japan offers opportunities for Canadian companies as suppliers, technology partners, and investment collaborators.
• Agriculture and agri-food: Japan is Canada’s 3rd largest agri-food and seafood export market, with exports totaling approximately $4.9 billion in 2024. Opportunities exist in beef, pork, grains, oilseeds, and functional foods, especially under the CPTPP.
• Automotive: With a shift toward electric vehicles and autonomous technologies, Canadian companies can collaborate with Japanese original equipment manufacturers (OEMs) and suppliers adapting to the Canada-United States-Mexico Agreement (CUSMA) requirements.
• Cleantech: Japan’s push toward decarbonization and renewable energy opens doors in batteries, smart grids, hydrogen and related clean technologies.
• Consumer products: Canada exports $200M in consumer goods to Japan annually, leveraging Japan’s positive perception of Canadian products.
• Energy: Japan’s reliance on imports for approximately 85% of its energy needs and interest in liquefied natural gas (LNG), liquefied petroleum gas (LPG), hydrogen, and ammonia projects in Canada create collaboration opportunities. Canada is also Japan’s second-largest supplier of liquefied propane gas (LPG).
• Forestry wood products: Strong demand exists for engineered wood, mass-timber, multi-storey building applications, wood pellets, and green-building technologies.
• ICT: As the 3rd largest global ICT market, Japan offers opportunities in artificial intelligence (AI), Internet of Things (IoT), connected vehicles, digital media, and next-generation networks.
• Investment: Japanese companies, with significant cash reserves, actively seek FDI opportunities in:
  • aerospace
  • agri-food
  • cleantech
  • energy
  • ICT
  • life sciences
  • mining
• Mining and critical minerals: Japan imports Canadian metals and invests in critical minerals and battery supply chains, including nickel, copper, lithium, and graphite.
• Life sciences: Japan, the 2nd largest healthcare market, offers opportunities in pharmaceuticals, medical devices, and research collaborations, especially in stem cell and oncology.

Canada and Japan are part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Find out how your business can benefit from opportunities through this free trade agreement:

• Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
• Search for all types of trade and investment agreements involving Canada and Japan
• Read an overview of Canada’s diplomatic, economic and cultural relationship with Japan