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A record number of Canadian companies export to a single country, and one bank says that’s a “problem” with several knock-on effects for the economy.

In 2018, just over 45,000 Canadian enterprises exported goods to another country, according to a new report from Statistics Canada. Among them, 70.5 per cent exported to a single country, the highest share in data that go back to 2010. (By comparison, close to 165,000 enterprises – or 2.6 per cent of the business population – imported goods from outside Canada.)

“Why is this a problem? For one, such a large exposure to one trade partner (i.e. the U.S.) makes Canadian exporters more vulnerable to U.S. economic cycles,” Krishen Rangasamy, senior economist at National Bank of Canada, said in a research note.

“More importantly, as we’ve seen with [the United States-Mexico-Canada Agreement], the lack of diversification reduces leverage for Canadian trade negotiators as they attempt to assuage an increasingly belligerent trade partner.”

The new North American trade pact was signed last November, but has yet to be ratified.

Among Canada’s exporters, about 26,000 – or 58 per cent – exported only to the U.S. in 2018, according to Statscan.

National Bank identified another issue with the rise of single-country exporters: it’s “restraining” export value growth. Between 2010 and 2018, exports from companies with one partner country grew 16 per cent to $97.5-billion. But for companies with two or more partners, exports grew 54 per cent to $425.4-billion.

“In other words, diversification of trade is not only crucial in helping shield Canada from U.S. protectionism, but it can be lucrative as well,” Mr. Rangasamy said.