The Canadian Government Response to Looming Tariffs 

The United States government recently announced 25% tariffs on steel and aluminum imports to the U.S. after previously proposing 10–25% tariffs across all Canadian imports. Canadian businesses must educate and prepare themselves for the implications of the continued economic uncertainty caused by these announcements and continued potential trade action by the United States. 

“Canada and the U.S. are more than just trading partners. We are highly integrated economies—and this has greatly benefitted both of our countries, for more than 150 years. We want to preserve this relationship, but in the face of the unjustified U.S. tariffs against Canadian goods, we are taking action to protect our economy, our workers, and our businesses. We will always stand for Canada.” 
– Dominic LeBlanc, Minister of Finance and Intergovernmental Affairs 

 

Immediate Tariff Impacts on Canadian Industries 

The threat of tariffs has far-reaching consequences across Canadian industries, affecting supply chains, production costs, and market competitiveness. Canadian businesses must prepare for immediate and long-term impacts, particularly as steel and aluminum tariffs are set to be confirmed this week.  

Steel and Aluminum Sector 

As of February 10, Canadian steel and aluminum U.S. imports face a 25% tariff. This places significant pressure on domestic Canadian producers who rely on U.S. markets. 60% of U.S. imported steel and aluminum are sourced from Canada. This tariff will immediately decrease the competitiveness of Canada’s steel and aluminum sector, resulting in potentially lost American contracts and declines in demand. Companies in this sector must consider proactive strategies such as cost mitigation, market diversification, and accessing available government relief programs for support through this time. 

Automotive Industry 

The highly integrated North American automotive supply chain makes the sector highly vulnerable to tariffs. Fabricators throughout the supply chain will potentially be significantly impacted by the steel and aluminum tariffs set to take effect. Higher costs on Canadian-produced vehicles and parts could lead to production slowdowns and workforce reductions. Businesses must develop strategies to streamline production processes, explore new supplier relationships, and leverage government support to offset financial strain. 

Proactive Measures for Canadian Businesses 

Considering these impending tariffs, businesses must take a strategic and proactive approach to mitigate risks. Key actions include: 

• Assessing Exposure: Understanding how tariffs impact supply chains, pricing structures, and operational costs 
• Developing a Tariff Mitigation Plan: Implementing strategies to adjust sourcing, pricing, and workforce planning 
• Exploring Alternative Markets: Identifying new trade partners beyond the U.S. to reduce dependency 
• Leveraging Government Support: Accessing tariff mitigation programs, funding initiatives, and sector-specific relief 

Leveraging Upcoming Government of Canada Support 

By staying informed of the potential Canadian government support and preparing for incoming escalation, businesses can position themselves to navigate economic uncertainty and maintain long-term competitiveness in the global market. 

Government Funding Focused on Competitiveness and Market Diversification  

There are various government funding programs currently available that support Canadian businesses in improving competitiveness, diversifying market reach, and ensuring their team is highly skilled and adaptable. Your business should begin to proactively develop a funding strategy to utilize government incentives to maximize your competitiveness and mitigate the potential impacts of the impending tariffs and economic uncertainty already felt by this ongoing threat.  

Such government funding programs currently include but are not limited to: 

• CanExport SMEs: Provides Canadian businesses with grants covering up to 50% of eligible export marketing project costs, to a maximum of $50,000 per application. Eligible applicants are for-profit Canadian SMEs with 1 to 500 full-time employees and annual revenues between $100,000 and $100 million. 
• Canada Job Grant (CJG): Offers employers in various provinces funding to cover up to two-thirds of training costs for employees, up to a maximum of $10,000 per trainee, depending on province. Funding and eligibility vary by province, with employers typically required to contribute a portion of training costs and ensure trainees meet certain qualifications.  
• FedDev Ontario: Offers no-interest, repayable contributions ranging from $125,000 up to $10 million per project for incorporated businesses. Eligible projects include those that develop, commercialize, or produce innovative products, improve productivity, and/or scale up to enter new markets.  
• PrairiesCan: A Regional Development Agency (RDA) similar to FedDev Ontario, Prairies Economic Development Canada (PrairiesCan) provides various funding programs to support economic development in the Prairie provinces, including grants and repayable loans for businesses aiming to grow, innovate, and enhance capabilities. 

Funding Programs Specific to Affected Sectors  

The potential 25% tariffs could have significant economic consequences, particularly for key Canadian industries. In response, the Government of Canada is expected to introduce sector-specific financial support programs to help businesses navigate these challenges, as it has done in previous trade disputes.  

Canada’s steel and aluminum industries have been previously impacted by U.S. tariffs, and another round of trade restrictions could put further strain the industry. During the 2018 steel and aluminum tariff, the Government of Canada allocated $100 million to the Steel and Aluminum Initiative (SAI) to support small and medium-sized enterprises (SMEs) in these sectors, helping them invest in productivity improvements, innovation, and supply chain diversification. If new tariffs are imposed, the government is likely to expand funding for these industries to ensure that Canadian producers remain competitive.  

Tariff Remissions  

As part of the potential tariff mitigation strategy, the Government of Canada will develop a tariffs remission process that will allow Canadian businesses to apply for relief from the tariffs imposed on certain U.S. goods. This funding may be eligible to specific businesses in situations where:  

• Goods used as inputs cannot be sourced domestically or reasonably from non-U.S. sources; and/or  
• Exceptional circumstances could have severe adverse impacts on the Canadian economy.  

By offering these types of relief, the government would minimize disruptions to supply chains and ensure that Canadian industries remain competitive in the face of imposed tariffs. 

Ryan Can Help Your Business Apply for Tariff Relief  

Navigating the complexities of the potential tariff impact and the Canadian government response requires a thorough understanding of the application procedures and the specific criteria that must be met.   

The Ryan Canadian Government Funding team specializes in systemizing processes and preparing the necessary forms for submission. We offer comprehensive support to businesses seeking tariff relief by:  

• Assessing Eligibility: Evaluating whether your business qualifies for remission based on the government’s criteria  
• Documentation Preparation: Assisting in the compilation and organization of required documentation to support your application 
• Submission Management: Handling the submission process to ensure compliance with government guidelines and timelines 
• Ongoing Support: Providing continuous assistance throughout the process, including responding to government inquiries and managing follow-up actions  

By leveraging our expertise, businesses can effectively navigate the remission process, ensuring that they receive the relief necessary to mitigate the impact of tariffs.  

Navigating Canada’s Tariff Response with Ryan  

By understanding the available relief measures and utilizing expert assistance, Canadian businesses can better manage the challenges posed by the current trade environment.  

Our team at Ryan is dedicated to helping businesses successfully navigate these complexities and providing tailored solutions to meet unique business needs. Please contact us to learn more about applying for tariff relief.