Navigating trade and tariffs

September 8, 2025

On September 5, 2025 Prime Minister Mark Carney outlined a strategy to protect Canada’s "strategic sectors" impacted by tariffs and make the economy stronger and more resilient to economic shocks. The government’s strategy provides support as follows:

• Auto Industry — Pause the electric vehicle mandate for 2026 models, which had required a 20% target for vehicles to be zero-emission. An immediate 60-day review of the government’s EV mandate is underway.
• New Financing and Liquidity Relief — Support businesses by:
  • Introducing a new $5 billion Strategic Response Fund for all sectors impacted by tariffs to adapt, diversify and grow, including auto, steel, lumber, aluminum and copper.
  • Expanding Business Development Bank of Canada loans for small and medium-sized businesses (SMBs) to $5 million and provide flexible financing through the Large Enterprise Tariff Loan Facility.
• Buy Canada — Introduce a new procurement policy to ensure that all federal institutions buy from Canadian suppliers/use Canadian materials to maximize the economic benefits for Canadians (vs. foreign suppliers for short-term gain).
• Workforce: Introduce a new reskilling package for up to 50,000 affected workers that would make EI more flexible and extend benefits.
• Canola and Agriculture Producers: Introduce a new $370 million biofuel production incentive, along with amendments to Clean Fuel Regulations, to support canola producers, along with increased funding to the AgriMarketing Program to support market diversification.
• Regional Tariff Response Initiative: Expand support to SMBs to $1 billion over three years, with flexible terms, and increase new non-repayable contributions to eligible businesses impacted by tariffs, including agricultural and seafood. $80 million of the $1 billion will be dedicated to Atlantic Canada businesses most affected by tariffs including the seafood, manufacturing, and steel sectors.

The U.S. appeals court determined that President Donald Trump’s use of emergency legislation to impose tariffs on nearly all countries, including Canada, was illegal. The court also directed that the opinion be withheld until October 14, 2025. The Trump administration has since asked the U.S. Supreme Court to uphold U.S. global tariffs by expediting a review of the case. This decision does not affect tariffs imposed under separate legislative authority, including the Section 232 tariffs (steel/aluminum and automobile/auto parts) and Section 301 tariffs, which remain in force.

The U.S. issued an executive order exempting graphite, tungsten, uranium, gold bullion and other metals from its country-based tariffs. However, silicone products are still subject to the levies. These exemptions are part of a larger executive order, issued on September 5, 2025, which identifies more than 45 categories for zero import tariffs from “aligned partners” who were successful in negotiating framework pacts to reduce “reciprocal” tariffs and duties imposed under the Section 232 national security statute. The executive order does not apply to Canada, since Canada and the U.S. have not yet negotiated a framework deal. The exempted tariffs cover items that "cannot be grown, mined, or naturally produced in the United States" or produced in sufficient volume to meet domestic demand and also “creates new carveouts for some agricultural products, aircraft and parts, and non-patented articles for use in pharmaceuticals.” These exemptions went into effect on September 8, 2025.

Insights provided by Joy Nott

KPMG Tax, Legal and Advisory leaders can help provide comprehensive support on tariffs and key considerations for navigating the path ahead.