As the U.S. election approaches, most (87 per cent) Canadian business leaders fear that the Canadian economy could become ‘collateral damage’ from growing American protectionism that would see less favourable trade deals between the countries and increased tariffs, finds a new KPMG in Canada survey.

The 2024 KPMG Private Enterprise™ Business Survey of 735 small- and medium-sized businesses (SMBs) reveals that business leaders are increasingly concerned that rising protectionism and the potential for major trade and policy changes south of the border will hurt the Canadian economy.  As a result of these concerns, 85 per cent of leaders are revisiting their business strategies to prepare for a change in leadership, in order to mitigate risks and take advantage of any opportunities.

Worries about the potential for major trade and policy changes south of the border are most pervasive among larger Canadian companies and sectors that are highly integrated with the U.S. economy such as manufacturing, automotive, transportation and warehousing, energy and natural resources, as well as technology, media and telecommunications sectors.

As geopolitical shifts reengineer global trade relationships, Canadian companies that previously enjoyed largely unrestricted access to U.S. and international markets are having to navigate rising protectionism and added costs, such as duties and tariffs,” says Shaira Nanji, Partner, Tax, KPMG Law. “Given the prospect of further changes to economic and trade policies, Canadian firms that are highly active in the U.S. will need to look for ways to mitigate added costs and take advantage of potential trade relief provisions to remain competitive.”

Key findings: Canada - U.S.


Key findings: Canada - U.S.

Source: KPMG Private EnterpriseTM Business Survey

A further 85 per cent of business leaders believe U.S. economic growth, productivity and investment will continue to outpace Canada and want a more integrated North American economy to help them drive their growth plans.

Impacts of U.S. tax policy

Concerns about Canada’s tax competitiveness relative to our trading partners continue to rise. Nearly nine in 10 (87 per cent) agree that if the U.S. introduces major tax cuts in the future, Canada’s higher personal and corporate tax rates and tax policies will seriously damage our competitiveness. A further 86 per cent agree that Canada’s personal income tax rates are uncompetitive compared with other advanced economies, which is making it harder to recruit talent.

These attitudes are echoed in a 2023 KPMG survey in which 79 per cent agreed the overall level of taxation that SMBs currently pay is too high and hurts their competitiveness with the U.S., with 36 per cent agreeing strongly.

“It is unclear which direction U.S. tax policy will take in 2025 and beyond,” says Paul Lynch, Partner-in-Charge, National Tax Centre. “One possibility is that U.S. tax rates, including rates imposed on capital gains, will increase significantly; another is that tax relief measures enacted by the U.S. in 2017 will continue after next year and even be enhanced. “Canadian businesses ―and indeed the Canadian government ―may need to deploy different strategies to drive growth, depending on the outcome of the American election.”

What’s next for the clean economy?

Canada and the U.S. have been largely aligned on environmental policies, delivering incentives for businesses to decarbonize, while investing in industries foundational to a clean economy. The survey revealed a broad consensus across most sectors that Canada needs to take further actions to harness the opportunities of the transition to a cleaner economy.

However, 84 per cent of Canadian business leaders expect a new U.S. Administration will reduce ‘green’ or ‘clean’ investments and business incentives to decarbonizeShould this occur, most (86 per cent) Canadian leaders would look to reexamine their own decarbonization plans to stay competitive.

This does not necessarily mean that Canadian organizations will fully scale back their decarbonizing plans. Nearly nine in 10 (88 per cent) of leaders believe that a decline in U.S. incentives to decarbonize and support for a transition to a cleaner economy could create opportunities for Canada to play more of a leadership role and attract more investment.

Other findings

  • 89 per cent agree that Canada needs to do more to keep pace with the U.S. on transitioning to the new economy (e.g., cutting-edge technologies, innovation, clean energy transition) – 40 per cent agree strongly
  • 86 per cent feel if the U.S dismantles decarbonization policies, our company will be reevaluating our decarbonization strategy to ensure we are on a level playing field (e.g., staying competitive) – 36 per cent agree strongly
  • 84 per cent expect a new U.S. Administration will reduce “green” or “clean” investments and business incentives to decarbonize – 35 per cent agree strongly
  • 88 per cent agree a reduction in U.S. ‘green’ incentives could lead to more ‘clean economy’ investment/opportunities in Canada.

About the KPMG Private Enterprise™ Business Survey

KPMG in Canada surveyed 735 business owners or executive level C-suite decision makers at small- and medium-sized Canadian companies between August 13 and Sept. 4, 2024, using Sago's premier business research panel. Thirty-seven per cent helm companies with more than C$500 million and less than C$1 billion in annual revenue, a quarter have more than C$300 million and less than $500 million in annual revenue, 26 per cent have between C$100 million and C$300 million in annual revenue, and 13 per cent have between C$10 million and C$50 million in annual revenue.

About KPMG in Canada

KPMG LLP, a limited liability partnership, is a full-service Audit, Tax and Advisory firm owned and operated by Canadians. For over 150 years, our professionals have provided consulting, accounting, auditing, and tax services to Canadians, inspiring confidence, empowering change, and driving innovation. Guided by our core values of Integrity, Excellence, Courage, Together, For Better, KPMG employs more than 10,000 people in over 40 locations across Canada, serving private- and public-sector clients. KPMG is consistently ranked one of Canada's top employers and one of the best places to work in the country.

The firm is established under the laws of Ontario and is a member of KPMG's global organization of independent member firms affiliated with KPMG International, a private English company limited by guarantee. Each KPMG firm is a legally distinct and separate entity and describes itself as such. For more information, see kpmg.com/ca.

For media inquiries, please contact:

Nancy White
National Communications  & Media Relations
KPMG in Canada
(416) 876-1400
nancywhite@kpmg.ca