For Canadian business leaders, trade and tariff uncertainty is no longer a theoretical risk. From ongoing tariff threats and retaliatory measures to supply chain disruptions and policy unpredictability, the past two years have brought near-constant disruption and volatility. For many companies, what once looked like a brief political storm has gradually revealed itself to be a new baseline for doing business in North America.
That reality is about to be tested again. The Canada-United States-Mexico Agreement (CUSMA), the agreement that underpins roughly $1 trillion in annual trade across the three countries, is set for formal renegotiation beginning this summer, and the outcome is far from decided. The stakes for Canadian businesses are significant across virtually every sector, from agriculture and automotive to financial services and technology.
Companies that have been managing tariff exposure reactively will find the renegotiation period as the time to get ahead of risk. Those that move now to adapt their supply chains, diversify their trade relationships and put the right protections in place will be far more resilient and better positioned to stay competitive.
The tariff landscape in Canada
Trade volatility in the past year has significantly impacted the integrated Canadian and American economies. After the initial introduction of Canadian countermeasure tariffs to offset impacts of trade duties, as of September 2025, the federal government has lifted these counter tariffs in recognition of the United States’ approach to allow most Canadian goods to enter the U.S. tariff-free under CUSMA.
Counter tariffs on steel, aluminum and automobiles remain in effect as negotiations with the U.S. continue. This is in recognition that the U.S. maintains tariffs on these sectors, without providing an exemption for CUSMA-compliant goods.
Because the "importer of record" is generally responsible for paying these duties, Canadian businesses acting as importers have continued to face higher operational costs, squeezing profit margins and reducing cash flow. This impact has especially been felt in regions with significant auto and manufacturing sectors, such as Ontario and Quebec.
For Canadian exporters, U.S. purchasers acting as importers of record may face higher prices, leading to a decline in demand for Canadian goods – an impact particularly felt by vulnerable sectors like manufacturing, energy, forestry and aerospace.
Navigating Canadian federal relief and remission
To mitigate negative impacts on the market and businesses, the Canadian government has introduced targeted measures to support market adaptation to tariffs, with indications from the Trump administration that tariffs are unlikely to be lifted.
Canadian risk managers should explore avenues such as the federal tariff support package, including $1 billion in Business Development Bank of Canada (BDC) financing and $500 million in regional funding specifically designed for tariffed industries, such as the manufacture and export of products containing steel, aluminum or copper.
There is also a targeted, case-by-case remission framework, allowing businesses to request a refund or relief from paid tariffs. This process is highly scrutinized by the Canada Border Services Agency and generally applies to situations where goods used as inputs cannot be sourced domestically or reasonably from non-U.S. sources or other exceptional circumstances that could have severe adverse impacts on the Canadian economy.
Managing tariff risk and protecting your business
Ahead of expected CUSMA renegotiation conversations beginning this July, Canadian businesses should take the opportunity to safeguard their operations to the best of their ability.
Understand your risk. Evaluate (or re-evaluate) your exposure to tariffs across Tier 1, Tier 2 and Tier 3 suppliers. Gaining visibility into extended supply chains is essential to understanding where tariff costs are being accumulated and where you might optimize transactions under trade agreements like the CUSMA – or new bilateral trade deals that may replace CUSMA.
Review contractual agreements. Many existing commercial agreements include standard "force majeure" provisions, but these clauses rarely address tariff-related issues, customs detentions or retaliatory trade measures. Ensure your contracts with suppliers and customers clearly allocate responsibility for paying tariffs and duties (defining who acts as the importer of record), define robust indemnification and insurance clauses, and establish mechanism provisions for the renegotiation of prices or responsibilities in the event of sudden tariff adjustments. In addition, consult with legal and tax advisors to manage transfer pricing adjustments, navigate the federal remission process (if applicable) and understand how tariffs impact your corporate tax planning.
Review and optimize your insurance programs. Work with your broker to evaluate whether your supply chain could be disrupted by trade restrictions, customs delays, or route deviations, and determine if specialized trade disruption coverage is required, plus ensure policy limits and declared values are adequate, keeping in mind that tariffs can inflate the replacement cost of imported machinery, parts and inventory. It’s important to present a clear narrative to underwriters regarding your supply chain resilience, alternative sourcing strategies and compliance protocols to secure the most favorable terms and pricing.
Trade uncertainty demands a holistic approach to risk
Navigating a changing landscape and regulations requires a holistic approach to risk. Whether you need to optimize your global insurance program, evaluate supply chain vulnerabilities or secure specialized trade credit solutions, Canadian businesses must stay on the front foot.