Meanwhile, Canadian businesses are fearful of losing CUSMA protections
Say what you like about Donald Trump… actually don’t. The US president is known for acting swiftly against those that he sees as critical of his policies as Ottawa has just been reminded.
An Ontario social media campaign focused on the impact of tariffs has sparked an aggressive response from the president who branded it “fake news” and said that all trade talks between the US and Canada are “herby terminated”.
The advert features the voice of former US president Ronald Reagan from a 1987 speech where he stated that tariffs appear to be protecting the US and that may work for a short time but longer term they “hurt every American.”
In response, Trump posted Thursday night on his Truth Social platform:
“TARIFFS ARE VERY IMPORTANT TO THE NATIONAL SECURITY, AND ECONOMY, OF THE U.S.A.,” Mr. Trump wrote. “Based on their egregious behavior, ALL TRADE NEGOTIATIONS WITH CANADA ARE HEREBY TERMINATED.”
Trump’s objection appears to be backed up by the Ronald Reagan Foundation, which said that the Canadian ad uses selective clips from the former Republican president’s radio address and that it “misrepresented” what he said. It also says that Ontario had not sought permission to use the speech.
While it’s not clear what the outcome of the latest twist in the Canada-US trade relationship may be, businesses are already considering what the future will bring.
In a KPMG survey conducted before the termination of trade talks, 88 per cent of Canadian business leaders say that the greatest risk to their company would be to lose their current protections under the Canada-US-Mexico Agreement (CUSMA).
Most (84%) are bracing for paying some kind of tariffs even if their goods do fall within the framework of any future trade deal and 82% expect tariffs to stay.
"Although exemptions for CUSMA-compliant goods are providing an escape hatch from many US tariffs, the framework and rules may change under a new trade deal in the future," says Joy Nott, Partner, Trade and Customs. "Historically, a North American free trade zone has allowed all three countries to act against global supply chain threats and work together in a highly competitive world trading environment. However, we could see a situation in which a bilateral agreement with the US replaces CUSMA in 2026 and alters the playing field."
While 88% agree that US tariffs are having an impact, the effects have been less severe than anticipated.
However, most respondents say the tariffs have reduced their businesses’ competitiveness and some business leaders note that the high cost of entering new overseas markets is a major barrier, while others report that the removal of the US$800 duty-free exemption has hurt sales and cut into profits.
"The full effect of US tariffs is only beginning to make its way through the economy now. In the initial phase, affected businesses chose to absorb the tariffs, whereas going forward we are expecting to see more businesses pass on the tariff costs through to end consumers," says Lachlan Wolfers, National Leader, KPMG Law.
