Canadian Business Leaders Call for Strong Political Action Amid Trade Uncertainty
A recent survey by KPMG in Canada reveals a strong consensus among business leaders about the need for bold political action to address trade challenges. Nearly 90% of respondents emphasized the importance of “strong and determined” political will at all levels of government to open up trade within Canada.
The survey, which gathered opinions from over 600 business leaders across the country, highlights growing concerns about trade uncertainty, particularly with the U.S. A significant 86% of respondents supported retaliatory tariffs against the U.S., while 83% advocated for a targeted, dollar-for-dollar response to counter American trade policies.
Timothy Prince, Canadian managing partner for clients and markets at KPMG, stressed that while businesses are preparing to adapt, they expect governments to take decisive steps. This includes eliminating interprovincial trade barriers, developing a national energy corridor, reducing regulatory hurdles, and modernizing the tax system to enhance competitiveness.
The survey also underscores the proactive measures businesses are taking to navigate the uncertain trade landscape. Seventy-six percent of respondents reported conducting strategic reviews of their operations, while 67% expressed confidence in their ability to withstand a trade war lasting over a year.
Business Leaders Urge Government Action and Explore Strategic Mitigation Strategies
Tammy Brown, national industry leader for industrial markets at KPMG in Canada, highlighted the sense of urgency created by trade uncertainty. “Companies are examining every aspect of their business to understand their options,” she said, with three-quarters of respondents already undertaking a strategic review of their operations.
The survey revealed that businesses are considering a range of mitigation strategies to navigate the trade uncertainty. These include optimizing and streamlining operations, building partnerships to open new markets, developing tariff and transfer pricing plans, diversifying supply chains, ceasing non-core activities, applying for subsidies, utilizing tax incentives, and seeking exemptions and foreign exchange hedging opportunities.
Brown also emphasized the importance of future-proofing operations, evaluating supply chains for concentration risks and vulnerabilities, and assessing how tariffs will impact costs, cash flow, and liquidity.
Additional findings from the survey show that 86% of respondents wanted increased pipelines and infrastructure from West and East coast regions producing oil and gas for export to non-US markets. Similarly, 86% called for Canada to move a higher volume of oil and gas via West to East pipelines, while 85% sought to eliminate interprovincial trade barriers as soon as possible. A significant 84% believed removing these barriers would be crucial for business survival amid a tariff war with the US.
The survey also revealed that 51% of respondents operated businesses in industrial manufacturing and energy and natural resources, sectors expected to be most impacted by US import duties. Additionally, 31% of respondents felt they could redirect 11-25% of their sales to Canadian markets.
Lachlan Wolfers, national leader of KPMG Law in Canada and global head of indirect tax at KPMG, cautioned that while shifting operations to the US is one way to mitigate tariffs, the economics must be carefully examined. He noted that there are many factors to consider, including navigating employment and environmental regulations, building new supplier and customer relationships, and managing US and Canadian tax complexities.
Conclusion
The survey by KPMG in Canada underscores a clear call to action for governments to take decisive steps in addressing trade uncertainty. Business leaders are urging bold political action to eliminate interprovincial trade barriers, develop national infrastructure, and modernize regulatory and tax systems to enhance competitiveness. While companies are proactively reviewing their operations and exploring mitigation strategies, there is a strong emphasis on the need for a coordinated government response to navigate the challenges posed by trade disputes, particularly with the U.S.
Canadian businesses have demonstrated resilience, with many expressing confidence in their ability to withstand prolonged trade disruptions. However, the survey highlights the importance of collaboration between governments and the private sector to create a stable and competitive business environment. By addressing trade barriers and leveraging strategic initiatives, Canada can position itself to thrive in an uncertain global trade landscape.
Frequently Asked Questions
What percentage of business leaders support retaliatory tariffs against the U.S.?
86% of respondents supported retaliatory tariffs against the U.S., while 83% advocated for a targeted, dollar-for-dollar response to counter American trade policies.
What strategies are businesses using to mitigate trade uncertainty?
Businesses are optimizing operations, building partnerships, diversifying supply chains, and exploring tax incentives and exemptions. Many are also conducting strategic reviews of their operations to prepare for potential disruptions.
What do business leaders think about interprovincial trade barriers?
85% of respondents sought to eliminate interprovincial trade barriers as soon as possible, with 84% believing this would be crucial for business survival amid a tariff war with the U.S.
Are businesses considering moving operations to the U.S.?
While some businesses may consider shifting operations to the U.S., leaders caution that this decision requires careful examination of factors such as regulatory compliance, supplier relationships, and tax complexities.
How confident are businesses in withstanding a prolonged trade war?
67% of respondents expressed confidence in their ability to withstand a trade war lasting over a year, demonstrating a sense of resilience among Canadian businesses.
