Building resilience in the face of trade disruption
The recent trade landscape has been significantly impacted by tariffs between the U.S. and Canada, impacting over 80% of businesses. Tariffs, which are taxes imposed on imported goods, serve various purposes, including protecting local industries and influencing trade balances. They can encourage consumers to buy domestic products by making imports more expensive, but they may also lead to higher prices for consumers and provoke retaliatory measures from other countries, resulting in trade disputes.
KPMG is committed to supporting and empowering the Canadian business community in transforming challenges into avenues for growth. By embracing a proactive approach and strategically optimizing your business strategies, you can pave the way for long-term success and sustainability.
80% of business leaders say they will be impacted by U.S. tariffs
Latest insights
July 11, 2025
In a letter to Prime Minister Carney dated July 10, 2025, President Trump proposes to apply a 35% tariff on imported “Canadian products” effective August 1, 2025.
The United States announced its intention to impose a new 50% tariff on imported copper effective August 1, 2025. This new tariff could have a significant impact on the Canadian copper industry, as well as on global trade dynamics.
The United States also suggested that it plans to impose a tariff of approximately 200% on pharmaceutical imports into the United States that could potentially take effect in a year.
Trade negotiations between Canada and the United States continue following Canada’s announcement on June 29, 2025 that it plans to rescind the Digital Services Tax (DST). The CRA has confirmed that companies who paid DST prior to the June 30 filing deadline must wait for Parliament to pass legislation revoking the tax before receiving refunds. In the meantime, the CRA has waived filing requirements and will not collect further payments. Canada announced the changes to the DST to resume trade negotiations with the United States, and to work toward a deal by July 21. Read more in our TaxNewsFlash.
President Trump has extended the application of the reduced reciprocal tariff rates to August 1, 2025 (from July 9, 2025). These tariff rates, which apply to many countries, are expected to change for some jurisdictions on August 1, 2025. Many countries have already been informed of their new reciprocal tariff rates, including Japan and South Korea.
President Trump is also considering an extra 10% tariff for countries that are seen as aligned with the “anti-American policies” of the “BRICS” group of countries, which includes Brazil, Russia, India, China and South Africa.
As a reminder, President Trump signed “The One Big Beautiful Bill” into law on July 4th, 2025. Read more in our TaxNewsFlash.
Insights provided by Joy Nott and Angelos Xilinas
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Implementing a proactive trade strategy
In the current environment, it is highly important to proactively assess current business strategies, structures and supply chains to mitigate risk and build resiliency.
Utilize trade data to gain a comprehensive understanding of the current landscape, including potential impacts and opportunities. This information can help pinpoint specific products or materials that are most susceptible to tariff increases and assess their effects on revenues, operations, and partnerships. By grasping the potential impact of tariffs on costs, companies can adopt cost-saving measures to sustain profitability.
Prioritize targeted operating outcomes to develop a response strategy model and scenario evaluation:
Diversify supply chains: By improving supply chain visibility, companies can better understand their operations and consider alternative suppliers located in countries with fewer tariffs, which can help reduce the risks of disruption. Additionally, enhancing resiliency through scenario planning and data-driven decision-making will enable proactive planning for future challenges.
Tariff exclusion process: Some tariffs allow for exclusions that fit the eligibility criteria. Companies can request exclusions for specific products, requiring detailed justifications and documentation.
Strategic transfer pricing: Transfer pricing plays a significant role in customs valuation, as it can directly impact the amount of tariffs paid. By establishing a lower transfer price, businesses may be able to reduce their tariff liabilities.
Evaluate contracts and partnerships: Conducting a thorough review of contracts related to customs duties and tariffs to understand obligations between parties can provide opportunities for cost reduction and improved compliance.
Country-of-origin rules: Assess the application of these rules in your operations.
The Canadian government introduced the tariff remission process as support for businesses impacted by tariffs. Collect the necessary information and submit an application for tariff recovery on goods imported from the U.S. for qualifying entities under the Canadian tariff remission process. These entities can recover tariffs if the goods cannot be sourced from Canada.
Access to insightful trade intelligence will be critical for businesses to stay informed and allow them to proactively adjust their strategies and operations. This monitoring will help minimize unexpected costs and disruptions, ensure compliance, and maintain competitive advantage in the global market. KPMG professionals can support with ongoing monitoring and guide you on how changes could impact your company.
A comprehensive approach to your trade strategy
KPMG Tax, Legal and Advisory leaders can help provide comprehensive support on tariffs and key considerations for navigating the path ahead.
Optimize supply chains, mitigate impact and recover applicable tariffs
Assess structures and policies to reduce tariff liabilities
Enhance resiliency to enable business continuity
Evaluate and manage enterprise risks and compliance obligations
Evaluate contracts and partnerships to understand obligations
Optimize capital and strategic restructuring to endure challenges
Manage productivity, risk, and change in the short through long term
Have a question for our team of professionals?
As Canada pulls together to address these uncertain times, KPMG teams can help equip you with the insights you need to make informed decisions on what’s best for your business. Contact us today.
Events
Watch
Navigating tariffs and transfer pricing in a disruptive environment
June 18, 2025 | KPMG International
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Tariff disruption: Responding with resilience
April 9, 2025 | KPMG in Canada
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Talking tariffs: Key considerations for private companies
Mar 26, 2025 | KPMG International
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The tariff impact: Insights from Canadian businesses on building resilience
Feb 25, 2025 | KPMG in Canada
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Navigating cross-functional tariff complexities
Feb 12, 2025 | KPMG International
Watch
Navigating the new administration’s key trade policies
Feb 6, 2025 | KPMG U.S. webcast
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U.S. Tariffs: Urgent implications for businesses in British Columbia
Feb 5, 2025 | KPMG in Canada
Watch
The tariff impact: Navigating cross-functional tariff complexities
Jan 28, 2025 | KPMG in Canada
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About the KPMG in Canada Tariffs Survey
KPMG in Canada surveyed 602 Canadian business leaders between February 13 and February 28 on Sago's premier business panel, using Methodify's online research platform. Eighty-nine per cent export to the U.S. and 80 per cent said they will be impacted by U.S. tariffs. Annual revenue breakdown: 26 per cent, between $500 million and $1 billion, 26 per cent, between $100 million and $500 million, 19 per cent, between $50 million and $100 million, 16 per cent, between $10 million and $50 million, and 13 per cent, more than $1 billion. No companies under $10 million in annual revenue were surveyed.
