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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November 6, 2025

On November 4, 2025, Prime Minister Mark Carney’s government tabled its first federal budget. From a trade perspective, this budget focused on trade diversification and trade growth, including developing and opening new markets to reduce Canada’s dependence on the U.S. market. The budget introduced a new strategic export office, and enhanced existing programs to increase Canada’s competitiveness. Canada’s trade strategy now includes a mix of infrastructure investments and investments in programs to help Canadian companies increase access to global markets. The budget notes that export diversification is key. The goal is to double exports to non-U.S. export markets in the next 10 years.
On November 3, 2025, Industry Minister Melanie Joly announced the federal government officially commenced a 30-day formal dispute resolution process against an auto company for moving planned vehicle production out of Canada. The objective for initiating the process is aimed at recovering Canadian taxpayer money and returning production to the Canadian facility.
On November 3, 2025, Canada and Pakistan announced they agreed to facilitate the export of Canadian canola to Pakistan. This agreement aligns with Canada’s objectives to open new markets for Canadian canola after China announced preliminary anti-dumping duties on Canadian canola imports in August in response to Canada’s 100% tariff on imports of Chinese electric vehicles.
On November 1, 2025, Prime Minister Carney and Korean President Lee Jae Myung announced the new Canada-Republic of Korea Security and Defence Cooperation Partnership which will deepen cooperation on security, defence, industry, and emerging domains such as cyber, space, and hybrid threats. They also announced the conclusion of negotiations on the General Security of Information Agreement, enabling more effective collaboration on information sharing, procurement, industrial security, and research. Prime Minister Carney also announced a Team Canada Trade Mission to Korea in 2026.
Also on November 1, 2025, Prime Minister Carney announced the initiation of free trade negotiations between Canada and Thailand, which represents a major step toward unlocking new opportunities for Canadian exporters.
Furthermore, on November 1, 2025, Prime Minister Carney announced Canada and Chile had signed the renewed Canada-Chile Strategic Partnership Framework, strengthening cooperation in critical minerals, clean energy, wildfire management, and digital technologies.
Finally, on November 1, 2025, Prime Minister Carney and the President of the People’s Republic of China Xi Jinping met and agreed to renew the Canada-China relationship, directing their officials to quickly resolve outstanding trade issues and discuss solutions to respective sensitivities regarding agriculture and agri-food products, such as canola, as well as seafood and electric vehicles. They also discussed pathways for deeper cooperation in clean and conventional energy, agriculture, manufacturing, climate change, and international finance.
While at the Asia-Pacific Economic Cooperation (APEC), Prime Minister Carney met with Korean business leaders to generate investment and outline Canada’s global leadership in artificial intelligence, quantum computing, critical minerals, and clean and conventional energy. Carney underscored the opportunities that Canada’s major infrastructure projects will offer to investors, emphasising the federal government’s actions to fast-track these projects and create greater certainty for investors.
Meanwhile, on November 1, 2025, the White House announced that President Trump and President Xi Jinping had reached a trade and economic agreement. According to the White House fact sheet, China agreed to:
- Halt the flow of fentanyl precursors to the United States
- Suspend and eliminate export controls on rare earth elements and other critical minerals
- End retaliation against U.S. semiconductor manufacturers
- Open its market to U.S. soybeans and other agricultural exports
- Suspend all retaliatory tariffs and non-tariff measures imposed since March 4, 2025
- Commit to large-scale purchases of U.S. soybeans through 2028.

In return, the United States will:

Reduce duties addressing the synthetic opioid supply chain from China. Initially imposed to counter the influx of synthetic opioids, the duty rate will decrease from 20% to 10% effective November 10, 2025, following China's commitment to curb the flow of fentanyl to the United States.
Extend the suspension of heightened reciprocal tariffs until November 10, 2026
Extend certain Section 301 tariff exclusions currently due to expire on November 29, 2025 until November 10, 2026
Suspend for one year the implementation of new end-user controls and responsive actions under the Section 301 investigation into China’s maritime and shipbuilding sectors.
President Trump also signed other agreements, including Reciprocal Trade agreements with Malaysia and Cambodia, and joint frameworks for trade negotiations with Thailand and Vietnam. President Trump also signed critical minerals cooperation agreements with Thailand and Malaysia. In Japan, President Trump announced major projects advancing Japan’s previous $550 billion investment commitment to the United States to further revitalize the U.S. industrial base, signed a landmark critical minerals agreement with Japan, secured historic purchases of U.S. energy from Japan, and deepened U.S.-Japan cooperation to combat illegal drug trafficking. Finally, in the Republic of Korea, the President secured billions in landmark commitments, including investments to support American jobs, further America’s energy dominance, promote American leadership in the technology revolution, and build the U.S.-Korea maritime partnership.

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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

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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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