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
October 24, 2025
President Trump announced in a social media post on October 23, 2025 that the U.S. is ending trade talks with Canada for the second time in recent months.
Canada also announced the reduction of annual remission quotas of two auto companies. As stated in a Department of Finance news release, Canada is reducing one’s annual remission quota by 24.2 per cent, and […] reducing another’s annual remission quota by 50 per cent”. These remission quota reductions are in reaction to the two companies’ recent announcements that they are scaling back their manufacturing presence in Canada.
On October 17, 2025, the Canadian government extended, for an additional two months, the current exemption for U.S. goods used in manufacturing, processing, or food and beverage packaging and goods used in agricultural production. The temporary exemption from tariffs on goods imported from the U.S. that are used to support various public organizations has also been extended for an additional two months. For more information, please refer to our KPMG TaxNewsFlash article from April 15, 2025, Tariffs — Canadian businesses may qualify for new relief.
Additional details regarding relief of surtaxes on specific types of steel melted and poured in China that are not produced in Canada are expected to be released on November 5, 2025, and will apply retroactively back to October 15, 2025. No further information is available currently.
Prime Minister Carney stated that Canada will not impose counter tariffs on the U.S. while intensive trade negotiations continue, and Trade Minister Dominic LeBlanc confirmed no deal has been reached but talks remain ongoing.
Also on October 17, 2025, President Donald Trump signed an executive order imposing a 25 per cent tariff on imported medium- and heavy-duty trucks under Section 232 of the Trade Expansion Act, effective November 1, with an exemption for vehicles traded under the Canada-U.S.-Mexico Agreement.
Meanwhile, a new trend has emerged with the U.S. government investing in two Canadian critical mineral companies. On October 16, 2025, the Trump administration announced it was developing a critical minerals strategy, which includes taking equity stakes in two Canadian critical-minerals companies based in Vancouver. The investment in the two companies secured highly favourable terms in both transactions, with millions in virtually free warrants issued, and a board seat in the case of one of the companies.
On October 16, 2025, the federal government announced it would roll out its $700-million loan guarantees to support Canada’s softwood lumber industry. The government announced the Business Development Bank of Canada (BDC) is now welcoming applications from companies to help mitigate challenges presented by the U.S. import taxes on lumber. According to the government, each ownership group will qualify for up to $20-million in loan-guarantee assistance, notably through accessing financing and letters of credit. The BDC’s goal is to assist small and medium-sized forestry operations by backstopping financial terms with existing lenders.
Insights provided by Joy Nott
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.
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