Tariffs Are Coming—Is Your Business Ready?
With the possibility of new U.S. tariffs on Canadian imports, businesses involved in cross-border trade should take steps to understand the potential impact and prepare accordingly. While recent developments have delayed implementation, trade tensions remain a concern, and Canada has indicated it may respond with its own countermeasures.
A strong trade relationship between Canada and the U.S. has long supported business growth, but shifting policies can introduce financial and operational challenges. Being proactive can help businesses adapt, reduce risks, and maintain stability.
How Tariffs Could Affect Your Business
Tariffs—taxes on imported goods—can significantly affect costs, supply chains, and pricing strategies. For example, a 25% tariff on Canadian goods entering the U.S. would directly impact businesses that export south. Similarly, potential Canadian countermeasures could increase costs for companies that import U.S. goods.
Here are some key areas where tariffs can have an impact:
Cost structure – Higher import duties can raise expenses for businesses that rely on foreign materials or products.
Supply chain stability – Companies dependent on U.S. or Canadian suppliers may face disruptions or increased costs.
Contractual obligations – Existing agreements may not account for tariff-related price changes, potentially leading to renegotiations.
Competitiveness – Higher costs could make it harder for Canadian and U.S. businesses to compete globally.
Steps to Strengthen Your Business Against Trade Uncertainty
1. Understand How Tariffs Apply to Your Business
Both Canada and the U.S. can impose tariffs under various trade laws, and these duties may apply on top of existing customs charges. Knowing which tariffs affect your business can help you plan ahead.
Action items:
✔ Review tariff classifications for your products to estimate potential costs.
✔ Consult with customs professionals to explore duty deferral programs.
✔ Assess legal strategies to minimize exposure to tariff increases.
2. Review Supplier and Customer Contracts
Many contracts do not account for unexpected tariff-related expenses, which could create pricing and supply challenges.
Action items:
✔ Check supply agreements to determine who is responsible for added costs.
✔ Look for clauses that allow for adjustments due to changes in trade laws.
✔ Start conversations with suppliers and customers to manage potential cost shifts.
3. Diversify Your Supply Chain
Relying too heavily on a single supplier or country increases risk. Expanding sourcing options can help reduce exposure.
Action items:
✔ Identify alternative suppliers outside the U.S. to create more flexibility.
✔ Explore whether materials can be sourced domestically or from other countries.
✔ Consider warehousing essential goods to manage supply chain disruptions.
4. Optimize Tax and Financial Strategies
In some cases, businesses may be able to offset tariff-related costs through tax deductions or financial planning.
Action items:
✔ Consult a financial advisor to determine if tariffs qualify for tax deductions.
✔ Explore trade credit insurance or strategies to manage price fluctuations.
✔ Structure transactions strategically to ensure tax-deductible expenses are placed with the right business entity.
5. Stay Informed and Engage in Trade Policy Discussions
Governments regularly consult businesses when shaping trade policies. Being part of these discussions can help ensure your industry’s concerns are heard.
Action items:
✔ Participate in Canadian government consultations on tariff responses.
✔ Work with industry associations to present a unified position.
✔ Encourage U.S. business partners to advocate for policies that support trade stability.
6. Look Into Tariff Exemptions or Refunds
In some cases, businesses may qualify for exemptions or duty drawback programs, which allow for refunds on certain tariffed goods.
Action items:
✔ Research previous tariff exemption cases in your industry.
✔ Gather supporting evidence to apply for exemptions where applicable.
✔ Work with trade experts to explore rebate or remission programs.
Planning Ahead for a More Resilient Business
While trade conditions may remain uncertain, businesses that take proactive steps today can better navigate potential disruptions. Whether through contract adjustments, supply chain diversification, financial planning, or policy engagement, preparation is key to staying competitive.
If you're considering how tariffs could impact your operations, connect with your advisor to explore the best approach for your business.
Disclaimer: The information in this article is for informational and educational purposes only and is not meant to be construed as financial advise. Please consult with a qualified financial advisor before making any financial decisions.
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