Ottawa also looking to boost labour mobility, eliminate regulatory barriers to internal trade

Nearly all Canadian employers are in full support of the federal government’s decision to impose tariffs on the US as US President Donald Trump pushes through with his threat of imposing such penalties on Canada.
Nine in 10 Canadian business leaders “wholeheartedly believe” that the federal and provincial governments “must stand firm in protecting Canada’s sovereignty and values” and that includes fighting tariffs with tariffs — even if it hurts their business, according to a KPMG report.
And over 8 in 10 want a targeted, dollar-for-dollar retaliatory response.
“Our poll findings reveal that Canadian business leaders believe Canada must stand firm even if it means being caught in the crossfire,” says Benjie Thomas, CEO and senior partner, KPMG in Canada.
Bracing for recession
Over eight in 10 (81 per cent) are willing to endure the short-term pain of retaliatory tariffs if Canada can negotiate a fair deal that protects the country’s trade-based economy, independence and sovereignty.
Despite the desire for a strong Canadian stance, 80 per cent are now preparing or bracing for a recession. And 80 per cent agree the federal government should reintroduce income supports similar to those offered during COVID to help Canadians whose jobs are disrupted or lost due to tariffs, reflecting results from another survey.
The federal government has since announced it is moving forward with 25 per cent tariffs on $155 billion worth of goods in response to the “unjustified and unreasonable tariffs imposed by the United States (U.S.) on Canadian goods,” effective Feb. 4.
Employers prepare for tariffs
With just a day before the tariffs come in, Canadian employers are already acting to keep their business going, according to KPMG’s survey of 250 business leaders across Canada.
Almost two-thirds (65 per cent) took pre-emptive action, preparing for potential tariffs by shipping goods or products to the U.S. before President Trump’s inauguration, the KPMG survey finds. Forty-eight per cent also plan to shift their investments to the U.S. and set up operations or production south of the 49th parallel to serve the U.S. market and reduce costs.
“The new U.S. administration’s economic and trade policies are having huge ripple effects in Canada and around the world,” says Lucy Iacovelli, Canadian managing partner, Tax and Legal, KPMG in Canada. “There are important steps that Canadian businesses can take to prepare for trade disruption and higher costs and build resiliency.
With the tariffs coming in, 60 per cent of Canadian employers will look to make acquisitions in the U.S. to serve their customers if tariffs are implemented.
However, business expansion will have to wait for many: 58 per cent will delay merger and acquisition plans for at least six months.
The tariffs could also mean financial stress for Canadians: 72 per cent of employers will pass costs on to their customers through increased prices, although 62 per cent will try to offset costs in other ways rather than pass them on to consumers.
Previously, Ontario Premier Doug Ford praised the federal government’s plan to secure the Canada-U.S. border in response to former Trump’s threat to impose a 25-per-cent tariff on Canadian imports.
Tackling regulatory barriers to internal trade
Meanwhile, at the Committee on Internal Trade (CIT) meeting, transport and Internal Trade Minister Anita Anand and her provincial and territorial counterparts have discussed possible moves to eliminate regulatory barriers to internal trade, encourage free movement of labour and further standardize regulations across Canada.
“Nine in 10 business leaders across the country want the federal and provincial governments to take immediate steps to eliminate inter-provincial trade barriers, reform the tax system, provide incentives to onshore, and encourage Canadians to ‘Buy Canadian’ – in short, they want a stronger, more resilient country,” says KPMG Canada’s Thomas.
The discussion focused on the following areas:
- Adoption of mutual recognition for goods and services across Canada so that a good or service sold in one jurisdiction can be sold in another, without the need to satisfy additional requirements.
- Improved labour mobility so a registered worker can work in any location across the country without delay.
- Improving the Canadian Free Trade Agreement by reducing exceptions and addressing other sectoral priorities.
“By working together with our provincial and territorial colleagues to remove internal trade and labour mobility barriers, we can unlock new market opportunities, attract investment and boost economic growth. Team Canada continues to work for the good of our economy, our businesses and all Canadians,” says Anand.
The Committee on Internal Trade consists of all federal, provincial, and territorial ministers responsible for internal trade, and is responsible for supervising the implementation of the CFTA, including providing oversight over a number of CFTA working groups; assisting in the resolution of disputes; approving the annual operating budget of the Internal Trade Secretariat (ITS); and considering any other matter that may affect the operation of the CFTA.
Various groups have previously called on the federal government to take decisive action following the tariff threat from Trump.