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Canadian Businesses Brace for US Tariffs
Trade lawyers discuss the impact of a potential second Trump presidency on Canadian businesses, highlighting strategies for mitigation and potential risks like shareholder activism.
English
Canada
EconomyUs PoliticsTradeInternational TradeTariffsBusinessLaw
Mccarthy Tétrault LlpNorton Rose Fulbright Canada LlpThe Globe And Mail
Martha HarrisonDonald TrumpTrevor Zeyl
- How might the uncertainty surrounding tariffs affect shareholder activism?
- Trevor Zeyl highlights the potential for increased shareholder activism in response to tariff uncertainty. Activists may target companies perceived as mismanaging the situation, potentially pushing for acquisitions or changes to business strategies.
- What are the implications for long-term contracts due to potential tariffs?
- Another major concern for clients is long-term contracts with fixed prices, which may become unprofitable with a 20 percent tariff markup. This could lead to contract renegotiations, cancellations, and Canadian companies seeking alternative markets.
- What advice do experts give to Canadian businesses in light of the uncertainties?
- Zeyl advises Canadian businesses to avoid making hasty decisions until there's certainty regarding President Trump's policies. The unpredictable nature of the economic landscape necessitates caution and strategic planning.
- What are some potential downsides to rushing to move goods ahead of tariff implementation?
- Strategies to adapt to potential tariffs include boosting domestic sales, expanding into the Mexican market or Europe, and shipping products before tariffs take effect. However, rushing to move goods could lead to overtaxed supply chains and delays.
- What strategies are Canadian businesses considering to mitigate the impact of potential tariffs?
- Martha Harrison's client, a Canadian manufacturer, is exploring opening a U.S. branch to mitigate potential tariffs on exports. This would involve selling products at a transfer price and then selling to American clients through the U.S. enterprise, but it won't eliminate tariffs entirely.