In today’s rapidly evolving global economy, businesses must remain vigilant and adaptable to external challenges that can impact operations and profitability. One such challenge is the recent imposition of tariffs by the United States on imports from key trading partners, including Canada, Mexico, and China. These measures have significant implications for Canadian businesses, particularly those engaged in cross-border trade.

Understanding the Current Trade Landscape

As of March 2025, the U.S. administration has implemented a 25% tariff on imports from Canada and Mexico, alongside a 20% tariff on Chinese goods. These actions have sparked a series of retaliatory measures, leading to increased uncertainty in international trade relations. In response, Canada has announced counter-tariffs on C$29.8 billion worth of American goods, including steel, aluminum, computers, sports equipment, and cast iron products. This is in addition to the C$30 billion in counter-tariffs imposed earlier in March. (Read more)

Implications for Canadian Businesses

The sectors most affected by these tariffs include automotive, manufacturing, agriculture, and retail:

• Automotive Industry: The highly integrated North American supply chain faces potential disruptions that could escalate production costs and increase consumer prices.
• Agriculture: Canadian farmers exporting piglets, meat, wheat, oats, and soybeans are renegotiating contracts with U.S. buyers to mitigate the financial impact of the tariffs. (Read more)
• Manufacturing & Construction: U.S. tariffs on steel and aluminum may deter major building initiatives and increase costs for infrastructure projects. (Read more)

Strategic Responses for Employers

To navigate these challenges effectively, Canadian employers can consider the following strategies:

1. Comprehensive Risk Assessment: Evaluate the extent of exposure to U.S. tariffs by analyzing supply chains, sourcing practices, and the proportion of revenue dependent on U.S. markets.
2. Supply Chain Diversification: Explore alternative suppliers and markets to reduce reliance on U.S. imports and exports.
3. Contractual Revisions: Review and, if necessary, renegotiate contracts with suppliers and customers to incorporate clauses that address tariff-related risks.
4. Stakeholder Communication: Maintain transparent communication with stakeholders, including employees, investors, and customers, about the potential impacts of tariffs.
5. Advocacy and Collaboration: Engage with industry associations and government bodies to advocate for policies that support affected industries and seek collaborative solutions to trade challenges.

Workforce Management Considerations

In addition to operational challenges, employers may need to evaluate workforce strategies in response to the economic impact of tariffs. Key considerations include:

• Temporary Layoffs and Constructive Dismissal: Employers should be cautious when implementing temporary layoffs, as some jurisdictions, such as Ontario, do not allow them without an explicit clause in the employment contract. Otherwise, layoffs could be considered constructive dismissal, entitling employees to notice or severance pay. (Read more)
• Work-Sharing Programs: Service Canada’s Work-Sharing Program can be an effective tool to avoid layoffs by providing Employment Insurance benefits to workers who agree to reduce their normal working hours.
• Alternative Workforce Solutions: Before resorting to layoffs, employers should explore options such as reduced workweeks, job-sharing arrangements, and internal redeployment.

The Role of Human Resources

HR professionals play a pivotal role in guiding organizations through external economic challenges. By fostering a culture of adaptability and continuous learning, HR can help employees develop the skills necessary to navigate uncertainty. Additionally, HR can support leadership in change management initiatives, ensuring that workforce strategies align with legal compliance and operational needs.

Looking Ahead – Addressing the Implications of U.S. Tariffs

While the current trade environment presents challenges, it also offers opportunities for innovation and growth. By proactively addressing the implications of U.S. tariffs, Canadian businesses can strengthen their resilience and competitiveness in the global market.

At Ford Keast LLP, we are committed to supporting our clients through these complex times. Our team of experts is available to provide guidance on risk management, workforce strategies, and compliance to help your business thrive amidst uncertainty.

To learn more about how our HR Consultant can help you and your business, contact us online or by telephone at 519-679-9330.