I heard that google now takes your IP host into consideration, since my host is from the U.S. and if people type in "promotional products, canada" I would not be included in this search?? Is this true? And what if my back link is "promotional products, canada" what happens then??
I'm also in Canada and have noticed that Googles search results are somewhat tailored to location. A lot of times when I'm searching, the majority of top results seem to be from the same city as I live and are not necessarily the best results for what I'm searching. My sites are hosted in Canada so I don't face the same issue as you but I understand your concern.
try exchanging links or putting up links to sites and blogs which talk about canada. for example: a site which talks about culture/music or anything but they are just talking about canada and not other countries. I think this should do the trick. Also make ur website content specific to canada.
Move your site to a Canadian host. There are some decently priced shared hosting plans available. Not quite as cheap as US hosts but close enough. Or, stay hosted in US but be a .ca domain (not useful for existing.com domains) And yes some Canadian links can help a bit.