Canadian business leaders remain steadfastly united in fighting U.S. tariffs with two-thirds (67 per cent) saying they can weather a trade war that lasts more than a year, finds a new survey by KPMG in Canada taken last week. Over eight in 10 (86 per cent) continue to support retaliatory tariffs against the U.S. – the same sentiment held a month ago when KPMG first surveyed corporate Canada on their tariff response.
The uncertainty around U.S. trade policy has had Canadian companies rushing to find ways to mitigate their risk and tariff-proof their organization. While it varies by company and industry, mitigation strategies include identifying areas to optimize and streamline operations, forming partnerships to open up new markets, diversifying supply chains, divesting non-core activities, exploring foreign-exchange hedging opportunities, incorporating tariff and transfer pricing plans, seeking exemptions, and securing subsidies or taking advantage of tax incentives, said KPMG.
“The business community remains unwavering in its commitment to stand up for Canada,” said Timothy Prince, the Canadian Managing Partner for Clients and Markets, KPMG in Canada. “The size of the tariffs and the length of time tariffs remain in place will impact their ability to weather the coming storm. Already the uncertainty is prompting companies to examine every facet of their business to understand their options, with three-quarters already undertaking a strategic review of their operations.”
“While they will do what they must to ride this out, they expect governments to take bold action to eliminate interprovincial barriers, build a national energy-agnostic corridor, reduce red tape, and revamp the tax system to improve their ability to compete. As many as 86 per cent say it’s time to diversify energy export markets with increased pipelines and infrastructure in Western and Eastern Canada, and reduce our reliance on having to move oil and gas to Eastern Canada through the U.S.”
Full survey results can be found here.
Nearly nine in 10 (88 per cent) want “strong and determined” political will at all levels of government to finally open up trade within Canada. As many as 84 per cent say the elimination of interprovincial barriers will be “extremely or very important” to the survival of their business in a trade war with the U.S. and want the barriers removed as quickly as possible. Almost a third (31 per cent) say they could redirect 11-to-25 per cent of their sales to markets in Canada, said the KPMG report.
“It’s imperative that companies future-proof their operations, take a hard look at their supply chains to find key concentration risks and vulnerabilities, evaluate how tariffs will impact their costs, cash flow, and liquidity and how much they’re able to absorb or pass on to their customers,” said Tammy Brown, National Industry Leader for Industrial Markets, KPMG in Canada. “We are working with our clients to develop scenario plans to map potential trade policy changes and impacts on their organizations. This will help build resiliency and flexibility in their supply chains to react quickly and effectively as the landscape changes. And while many were already focused on optimizing their operations, this trade uncertainty has created a new sense of urgency.”
