This recent escalation of trade tensions put new U.S. tariffs on Canadian products, from manufacturers to agriculture to technology to retailers. Beyond merely adding costs for exporters, the tariffs will disrupt supply chains as businesses are being forced to think again about trade. Yet, with the right approach, it will be possible to mitigate risks and find new opportunities for Canadian businesses in global markets.

Industries Most Affected and Key Risks

The latest round of US tariffs has targeted, in particular:

• Manufacturing & Auto Sector: Car manufacturers and machinery producers face increased raw material costs for steel and aluminum.
• Agriculture & Food Exports: Canadian farmers are faced with increased export costs for dairy products, seafood, and grain.
• Technology & Electronics: Companies that source components from the US face higher expenses, thus affecting pricing and competitiveness.
• Retail & Consumer Goods: Higher import costs of U.S.-made products are passed on to the Canadian consumer and other businesses by way of higher prices.
• How to Overcome the Challenges of Tariffs

Despite these challenges, Canadian businesses can adopt strategic solutions to not only survive but thrive.

1. Diversification of Suppliers & Alternative Sourcing

The businesses are very vulnerable to U.S. price fluctuations and trade disruptions because they are dependent on U.S. suppliers. In place, companies should:

• Source materials from Latin America, Europe, or Asia, using the CPTPP-Comprehensive and Progressive Agreement for Trans-Pacific Partnership to reduce import costs.
• Partner with Canadian suppliers to strengthen domestic production and reduce reliance on U.S. imports.
• Research co-packing and private labelling to explore how to produce products in tariff-free countries and re-export under Canadian trade agreements.

2. Leverage Free Trade Agreements (CPTPP & CETA)

Canada’s solid trade partnerships can open new opportunities:

• CPTPP opens up immediate, tariff-free access to fast-growing markets like Japan, Vietnam, and Australia.
• CETA (Canada-European Union Comprehensive Economic and Trade Agreement): Opening up barriers for exports to the EU makes Europe a lucrative alternative to the U.S. for export businesses.
• USMCA (NAFTA 2.0): Businesses can still receive preferential terms of trade but must be much more attentive in structuring their supply chains according to new rules.

3. Invest in Domestic Innovation & Manufacturing

Rather than rely on U.S. imports, Canadian businesses can:

• Expand local production and automation to reduce long-term costs.
• Apply for government grants and incentives that support manufacturing and export growth.
• Develop digital platforms to connect with new global buyers and minimize logistics challenges.

Turning Challenges into Opportunities

Though U.S. tariffs have immediate challenges, they catalyze the creativity, expansion, and diversification of trade relationships for businesses. The current disruption brought about by such tariffs can be turned into a competitive advantage through consideration of supply chains, leveraging trade agreements, and investing in growth at home.

Act Today: Future-Proof Your Business

The key to overcoming trade uncertainty is strategic planning and proactive adaptation. If you’re looking to safeguard your business from tariffs and explore new international markets, let’s build a tariff-proof business plan tailored to your industry.

Book a consultation today and let’s create a roadmap for your global expansion!