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
November 14-21, 2025
On November 21, 2025, Prime Minister Carney and the President of the UAE, His Highness Sheikh Mohamed bin Zayed Al Nahyan, announced that Canada and the UAE began negotiations on a Comprehensive Economic Partnership Agreement (CEPA). The CEPA will cut tariffs, eliminate red tape, and expand market access for Canadian exporters of goods and services. This partnership with the UAE expands opportunity for Canadian sectors such as engineering, aerospace, agri-food and seafood, while also facilitating greater collaboration in the digital sectors. Canada has already signed similar agreements with the Republic of Korea and Chile. This new trade agreement with the UAE has the potential to double Canada-UAE trade from $3.4 billion to $7 billion in the next decade.
On November 14, 2025, U.S. President Donald Trump signed an Executive Order to remove reciprocal tariffs on certain agricultural products effective on imports to the U.S. starting on November 13, 2025. The rationale for the tariff reduction was due to current domestic capacity constraints versus demand, and negotiations with various trading partners around the world. There is a lengthy list of goods that no longer attract reciprocal tariffs, including tomatoes, certain beef products, various nuts, bananas, pineapples, avocados, oranges, orange juice, coffee, fertilizers and hundreds of other items. Regular tariffs, if any, would still apply. Meanwhile to further address U.S. capacity constraints and bring down U.S. domestic food prices, President Donald Trump signed an executive order on November 20th which removed a 40 per cent tariff on certain agricultural products imported into the U.S. from Brazil. These agricultural products include coffee, beef and fruits. This latest tariff relief against Brazilian food imports is retroactive to November 13, 2025.
The U.S. also seems to have undertaken a potential policy change with respect to U.S. tariffs on steel and aluminum. A proclamation (Section 13) published on October 17, 2025, addressed imports of buses, medium and heavy trucks, and their parts into the U.S. This proclamation said the Secretary of Commerce was authorized to modify the steel and aluminum tariff rates to no lower than 25% if certain conditions are met. Despite this proclamation, the Secretary of Commerce has not yet moved to reduce the tariff rates on steel or aluminum, and several conditions would need to be met by U.S. importers for a reduced rate. While this is not the wide-ranging tariff relief on steel and aluminum that Canadians had been hoping for, this is the first sign that the U.S. may be willing to consider reducing tariffs on the relevant metals to help boost U.S. domestic production of automobiles or trucks. KPMG will continue to monitor these issues and will report additional insights as they emerge.
On November 18, 2025, the House of Commons won a crucial confidence vote, passing Canada’s 2025 federal budget. The fiscal plan includes measures to realize the government’s goal of doubling exports to non-U.S. markets in the next 10 years. This approach includes a strategy to diversify trade from the U.S. with the creation of a Strategic Exports Office at Global Affairs Canada which aims to centralize government support and simplify processes for exporters. The government also announced $5 billion over seven years for a Trade Diversification Corridors Fund that will invest in ports, railways, digital and transportation infrastructure. Explore our Federal Budget 2025 hub for an analysis of newly announced measures.
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.
Watch
The future of trade: Redefining strategies for a new era
August 7, 2025 | KPMG in Canada
Watch
Tariff disruption: Responding with resilience
April 9, 2025 | KPMG in Canada
Watch
The tariff impact: Insights from Canadian businesses on building resilience
Feb 25, 2025 | KPMG in Canada
Watch
The tariff impact: Navigating trade disruption as a Canadian business
Jan 28, 2025 | KPMG in Canada
