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
January 19, 2026
Canada reaches tariff-quota deal with China on EVs and canola
On January 16, 2026 Prime Minister Carney announced a deal to lower tariff rates for Chinese-made electric vehicles in exchange for major reductions in China’s tariffs on a range of products, including canola seed (dropping to 15 percent by March 2026). The agreement will allow up to 49,000 Chinese-made EVs into the Canadian market at a standard duty rate of 6.1%. Previously, Canada had aligned with the United States by imposing an additional 100% tariff rate on Chinese EVs in 2024. In return, Canadian canola meal, lobsters, crabs and peas will no longer be subject to Chinese tariffs from March to at least the end of 2026.
Canada has set a new goal to increase exports to China by 50 percent by 2030, resetting Canada’s trade relationship with the world’s second largest economy. The Prime Minister and Chinese President Xi Jinping also discussed increasing two-way investment in clean energy and technology, agri-food, wood products, and other sectors. The deal, which would help to unlock nearly $3 billion in exports, is good news for Canada’s Western provinces. However, a key objective for both the federal government and Ontario will be to protect Canada’s auto industry, already struggling from recent U.S. actions and reshoring ambitions.
Overall, Canada’s exports to the United States in October accounted for 67.3 percent of all exports, the lowest non-pandemic level since the current method of data calculation was established in 1997. In recent years prior to U.S. trade volatility, approximately 76 percent of all Canada exports went to the United States.
Recent U.S. tariff and trade developments
Computing chips: On January 14, 2026, the United States imposed an immediate 25 percent tariff on certain advanced computing chips, with exceptions for chips supporting the U.S. technology supply chain and domestic manufacturing capacity (“except as otherwise provided in this proclamation, imports of Covered Products will be subject to a 25 per cent duty rate”.) This tariff came into effect on January 15, 2026. No duty drawback will be made available.
Critical minerals: On January 14, 2026, President Trump signed a proclamation1 (under Section 232 of the Trade Expansion Act of 1962) directing the U.S. Secretary of Commerce and U.S. Trade Representative to negotiate agreements with trading partners to address national security concerns related to imports of processed critical minerals and their derivative products (PCMDPs). According to the White House release,2 the Trump Administration aims to promote price floors for trade in PCMDPs, and may take further action if agreements are not reached within 180 days.
President Trump has also signaled possible plans to impose tariffs on countries that trade or do business with Iran or do not support the United States’ position on Greenland. The United States did not cite a legal authority for these potential actions.
The European Union is set to sign agreements with Australia and a block of Latin American countries.
Insights provided by Joy Nott
1 Adjusting Imports of Processed Critical Minerals and Their Derivative Products into the United States, The White House, January 14, 2026.
2 Fact Sheet: President Donald J. Trump Directs Negotiations to Adjust Imports of Processed Critical Minerals and Their Derivative Products into the United States, The White House, January 14, 2026.
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.
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