The recent tariffs on Canadian goods could significantly impact our economy. Such measures can strain trade relationships, elevate costs, and change the competitive landscape. It's clear that our trade dynamics with the U.S. are—and will likely remain—volatile, creating a considerable amount of uncertainty for many Canadian businesses. This article discusses strategies for employers to navigate these challenges and prepare for the unpredictable times ahead.
Breaking Down the Tariff Dispute: A Quick Timeline
On February 1, 2025, President Donald Trump took a significant step by using his authority under the International Emergency Economic Powers Act and the National Emergencies Act to issue three Executive Orders. These orders instructed the U.S. to implement new tariffs on imports from Canada, Mexico, and China. The specifics of these tariffs were as follows:
These tariffs were scheduled to go into effect at 12:01 a.m. Eastern Time on February 4, 2025, and would remain in place until both the U.S. and each country involved could agree on adequate border protection measures.
In retaliation, Canada announced its intention to impose its own tariffs—referred to as surtax—in response to the U.S. actions. This surtax was set to take effect simultaneously with the U.S. tariffs, beginning with a 25% surtax on approximately $30 billion worth of U.S. goods, followed by a second phase that would impose surtaxes on $125 billion of U.S. products after a 21-day period. Several provinces and territories across Canada also indicated they would take retaliatory actions, including canceling U.S. business contracts and removing American products from liquor store shelves.
However, on February 3, 2025, both the U.S. and Canada agreed to a temporary halt to the looming tariff threats, with President Trump agreeing to a 30-day pause to facilitate negotiations. A similar agreement was reached with Mexico, though no such accord was realized with China, which subsequently enacted its own retaliatory measures.
After the 30-day pause, the U.S. moved forward with implementing 25% tariffs on Canadian exports and a 10% tariff on Canadian energy products, effective March 4, 2025.
In response, Canada implemented its counter-tariffs, or surtax, which included a 25% tariff on a designated list of goods worth $30 billion, effective March 5, 2025, which would escalate to cover $155 billion worth of products within 21 days. Canada's surtax will remain active until the U.S. withdraws its trade actions. Additionally, Canada is currently evaluating other necessary non-tariff measures should the U.S. tariffs continue.
Key Changes Effective Until April 2
On March 5, 2025, the U.S. announced a temporary 30-day suspension of tariffs on all automobiles and auto parts. Following this, on March 6, the U.S. specified that the suspension would continue for products compliant with the Canada-U.S.-Mexico Agreement (CUSMA) until April 2, 2025. Here’s what you need to know regarding the rules for Canadian imports:
Although the U.S. has provided this limited tariff relief, Canada’s 25% surtax on $30 billion worth of U.S. goods remains intact. However, Canada has postponed its second round of retaliatory tariffs on $125 billion CAD in U.S. imports until April 2, 2025.
25% duty on automobiles not made in the U.S.
On March 26, 2025, President Trump announced plans to sign an executive order imposing a 25% duty on all vehicles not manufactured in America, with this measure taking effect on April 2.
Considerations for employers during U.S. tariffs unpredictability
While the threat of tariffs on Canadian goods and products has been temporarily paused, the potential for a tariff war in the near future has caused considerable uncertainty for many Canadian workplaces. Employers are struggling with the uncertainty of a potential trade war with the U.S. and the tariffs imposed by the U.S. as well as retaliatory tariffs from our Canadian sides that may go along with them. This uncertainty can lead to hiring freezes or revised hiring projections, layoffs, budget reforecasts, or strict expense management among other outcomes. It can also mean opportunity for some industries as some organizations look to repatriate processes and contracts or find domestic business partners.
In times of uncertainty for business, it is very likely that your employees are also experiencing feelings of uncertainty. They may be feeling vulnerable about the security of their job with concerns about their financial health, the impacts of inflation and increasing costs of things their families need, negative impacts on their retirement savings, or anxiety around threats about annexation by U.S. President Donald Trump.
How to help employees navigate during times of uncertainty
Employers can help their employees navigate unpredictable times by reminding your employees of the resources available to them through your benefits and retirement programs. Your Employee Assistance Plan (EAP) can be helpful on a number of fronts – there are self-help resources on managing change, coping skills for anxiety, and counselling available, as well as financial wellness resources and tools. Your retirement plan provider and consulting firm can help with resources on managing market fluctuations and retirement calculators.
Employers can also help their employees through challenging times by communicating often and being as transparent as possible about what your organization is doing to mitigate the risks and impacts of our current economic unease.
We’re here to help
As the ongoing tariff dispute between the U.S. and Canada continues to evolve, we will continue to provide updates and insights. Our experienced team is actively working with insurance partners to optimize coverage and maintain cost-effective solutions during these uncertain times. Through proactive policy management and continuous market analysis, we're here to help you navigate economic shifts with confidence.
Reach out to us today to review your current coverage and explore strategies for maintaining stability in an ever-evolving market. We understand the broader impact tariffs may have on your operations, workforce, and overall strategy, and we're here to help you navigate these shifts.