Navigating trade and tariffs

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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

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December 3, 2025

The US administration is signaling that it may withdraw from the Canada-U.S.-Mexico Agreement on trade (CUSMA) as conversations with Prime Minister Carney and President Trump are ongoing. Meanwhile, all three countries, Canada, U.S. and Mexico (USMCA/CUSMA/T-MEC) have started their public consultations ahead of the agreement review set for July 1, 2026.

New measures announced to protect Canada’s steel and lumber industries:

Prime Minister Carney announced additional measures on Nov. 26, 2025, to help transform the Canadian steel and softwood lumber industries. These measures:

1. Limit foreign steel imports to ensure Canadian steel producers have better access to the domestic market as follows:

Reduce quotas for countries that do not have a free trade agreement (FTA) with Canada from 50% to 20% of 2024 levels.
Reduce quotas for countries with which Canada has a FTA (excluding the U.S. and Mexico) from 100% to 75% of 2024 levels.
Impose a global 25% tariff on imported steel-derivative products such as wind towers, prefabricated buildings, fasteners and wires.

2. Toughen border measures to combat foreign steel dumping and non-compliance by equipping the Canada Border Services Agency (CBSA) with a dedicated steel compliance team.

3. End the temporary remission of Canadian tariffs on imports of steel used in manufacturing, food and beverage packaging and agricultural production on Jan. 31, 2026. This delay is intended to give Canadian companies time to adjust and move their supply chain away from imported steel.

KPMG Trade Insight: Canadian importers who are paying surtaxes on their imports because they are faced with limited sourcing options, pre-existing contracts, and other exceptional circumstances should apply to the Department of Finance for specific surtax relief through a remission order as soon as possible. The remission application process can take more than six months.

The Government of Canada has indicated that, going forward, steel importers must provide verifiable proof of the country in which the steel was melted and poured, or they may be subject to increased tariffs. The CBSA steel compliance team will systematically monitor steel imports from both free trade partners and non-free trade countries to ensure accurate surtax collection and safeguard the Canadian steel industry. Importers lacking appropriate documentation could have their steel classified by CBSA as originating from China and face applicable surtaxes on their shipments. Acceptable forms of documentation include:

Mill test certificates, mill test reports, material test certificates, certificates of conformance, compliance, inspection, or analysis
Certified inspection reports
Metallurgical test reports, or
Chemical analysis certificates.

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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.

Trade and customs
Optimize supply chains, mitigate impact and recover applicable tariffs

Transfer pricing
Assess structures and policies to reduce tariff liabilities

Supply chain
Enhance resiliency to enable business continuity

Risk services
Evaluate and manage enterprise risks and compliance obligations

Legal implications
Evaluate contracts and partnerships to understand obligations

Mergers and acquisitions
Optimize capital and strategic restructuring to endure challenges

People and change
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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