Tariffs and Canadian Businesses: How to Manage Costs, Supply Chains, and Investment 

For Canadian businesses that trade across the border, tariffs have quickly become a significant cost and planning consideration. 

The latest developments have added another layer of complexity. In August 2026, the Government of Canada announced new counter-tariffs alongside a $7.5 billion package of new and enhanced supports for Canadian businesses and workers affected by U.S. tariffs and Canada’s response to them. The new and updated measures include billions of dollars in additional business funding, financing, and liquidity support. 

For Canadian manufacturers, importers, exporters, and other affected businesses, the challenge now extends beyond changing tariff rates. Costs, supply chains, investment decisions, and competitiveness may all be affected, making a coordinated and strategic response increasingly important. 

Understanding Ongoing Tariff Exposure 

One of the biggest challenges businesses face today is determining exactly how tariffs apply to their products and supply chains. 

Recent discussions with Canadian businesses have highlighted a common challenge: calculating duty exposure now requires several layers of analysis. Businesses need to consider an item’s tariff classification, its country of origin, any applicable trade measures, and whether exclusions or remission orders are available. 

This makes reviewing existing customs practices an important first step. 

Organizations should confirm that their imports are classified correctly and that the country of origin has been properly determined. The country a product is shipped from is not necessarily its country of origin, which can result in a substantial difference in customs duty when U.S. or Canadian tariffs are applied. 

Businesses should also review the value used to calculate duties. Certain legitimate cost components may be excluded from the value for duty depending on the circumstances, potentially reducing the amount on which tariffs are calculated. 

Once those factors have been reviewed, a business can quantify its total tariff exposure and investigate available relief mechanisms, including remission orders, duty drawbacks, and other opportunities to reduce or recover customs duties. These are among the core actions that Ryan’s Customs Duty specialists recommend businesses take in the current environment. 

The goal is to establish an accurate baseline for the potential impact of new or increased tariffs before making larger operational decisions. 

Where appropriate, importers may also be able to reduce future exposure by reviewing how goods are sourced, structured, and entered into the U.S. market. This can include revisiting country-of-origin determinations, assessing whether alternative supply-chain structures could result in more favourable tariff treatment, and identifying any applicable exclusions, relief programs, or other duty-mitigation opportunities. These strategies will depend on the specific goods and transaction structure, but they can help businesses move beyond simply calculating tariff costs toward actively managing them. 

Building a Tariff Response Strategy 

Government funding can be an integral part of an organization’s tariff mitigation strategy. Funding program applications are most effective when they support a project the business already has a strong strategic reason to undertake. 

Rather than asking which tariff grants they can apply for, businesses may benefit from starting with a broader assessment of their situation by asking themselves:  

• What is our true tariff exposure? 
• Can any of those costs be reduced or recovered? 
• Which parts of our supply chain are most vulnerable? 
• Is a pivot required to new markets, products, processes, or facilities? 
• What investment would improve our competitiveness? 
• Once that project has been defined, which funding programs could help make it possible? 

This approach is particularly important because tariff conditions continue to change and organizations must adapt to those changes. Waiting for complete certainty in such an uncertain environment could make long-term planning increasingly difficult. 

Canada’s latest countermeasures took effect on September 8, 2026, with tariffs of 15%, 25%, and 50% applying to targeted U.S. goods covering approximately $27.6 billion in imports. 

Canadian businesses have been forced to continuously confront the wider uncertainty surrounding future tariff rates, exclusions, negotiations, and trade policy. In recent discussions, the prevailing business sentiment has been characterized by unpredictability and concern about what the next change could bring. 

Are Tariffs Impacting Canada’s Supply Chain? 

For many Canadian companies, particularly manufacturers, today’s tariff pressures raise the bigger question of whether existing supply-chain models still make financial sense.  

North American manufacturing has developed around deeply integrated supply chains, with components crossing the Canada-U.S. border several times in some cases as different stages of production are completed. That model becomes more expensive when new duties are applied at points that businesses previously assumed would remain relatively frictionless. 

Canadian businesses may therefore need to reconsider where products and materials are sourced, where production takes place, and which markets to serve. 

Potential responses could include moving more production to Canada, sourcing inputs from alternative markets, investing in automation to offset higher costs, strengthening domestic supply chains, or expanding into new international markets to reduce reliance on U.S. customers. 

The right response will undoubtedly vary by business. Nonetheless, businesses should understand their customs exposure before deciding where major investments will generate the greatest return. 

Canadian Funding to Help Businesses Adapt 

Once a business has identified the changes it needs to make, government funding may help support those strategic plans. 

The tariff response package announced by the federal government in August 2026 includes $7.5 billion in new and expanded measures, with support aimed at businesses facing trade disruption, liquidity pressures, capital investment needs, and diversification challenges. 

Among the measures are expanded support through the Regional Tariff Response Initiative (RTRI), the new Canada Strong Diversification Fund, additional Business Development Bank of Canada (BDC) financing, and greater flexibility through the Large Enterprise Tariff Loan (LETL) facility program. 

As noted above, businesses will benefit from first defining the project they need to undertake. That project could involve new equipment, automation, production capacity expansion, supply-chain adjustments, productivity improvements, or forays into new markets. Canadian government funding can then be assessed as one potential part of a broader financing strategy. 

Consider SR&ED for Experimentation-Heavy Projects 

Tariff pressures may also prompt Canadian businesses to develop new products, improve manufacturing processes, or test new technologies as they adapt their operations. 

When that work involves scientific or technological uncertainty and a systematic process of experimentation or analysis, it may qualify for Canada’s Scientific Research and Experimental Development (SR&ED) tax incentive program. Eligible work can include experimental development, as well as certain engineering, testing, programming, and other activities that directly support an SR&ED project. 

SR&ED can also be combined with government funding. Receiving another form of government support does not automatically make research and development (R&D) work ineligible for the SR&ED tax credit, although businesses need to account for government funding when preparing their SR&ED claims. 

For companies investing in R&D as part of a broader response to tariff pressure, considering SR&ED alongside grants and other incentives can help create a more comprehensive funding strategy. 

Turn Tariff Pressure into a Resilient Business Strategy 

Canadian businesses have several support options available to help respond to the impact of new or increased tariffs. 

A comprehensive tariff strategy can identify opportunities to reduce immediate customs duty costs. A supply-chain and investment review can identify ways to reduce future exposure. Government funding and the SR&ED tax credit may then help businesses implement those changes. 

For Canadian businesses planning investments in equipment, automation, productivity, Canadian manufacturing capacity, supply-chain resilience, or market diversification over the next 12 to 24 months, the support available under the expanded federal response warrants revisiting those plans. 

Ryan’s Customs Duty and Government Funding teams can help Canadian businesses assess tariff exposure, identify potential cost-reduction opportunities, evaluate planned investments, and determine whether available government funding may align with those projects. 

With the trade environment changing quickly, understanding all sides of the equation can help businesses make better-informed decisions about what comes next.