Dan Kiselbach provides an update on the emerging Canada-US business, trade and investment environment in 2025, at the American Chamber of Commerce in Canada – Western Chapter’s presentation on April 3, 2025.
Key Takeaways:
- US tax policy: The stage is set for US tax adjustments. A Republican-controlled Congress may use the budget reconciliation process in order to enact a tax bill in 2025. The bill may include extensions to provisions within the Tax Cuts and Jobs Act. It is likely to include at least some of the tax cuts proposed by President-elect Trump during his campaign.
- US import tariffs. The new US Trump Administration may bring about significant changes including increased tariffs on imported goods. These changes may be imposed by way of an Executive Order or with Congressional approval. Countries considered high-risk from an increased US tariff standpoint include Canada, China, the EU, and Mexico. Increased US tariffs may disrupt supply chains, create uncertain business conditions, and train trade relationships. Businesses are now scenario planning and considering potential options for dealing with increased US tariffs.
- Retaliatory measures. The imposition of increased US tariffs could result in widespread retaliatory measures. Canada, China, the EU, and Mexico could take various steps to target US exports, complicating supply networks, and . Canadian retaliatory countermeasures may include surtaxes on specified goods. The result may be a general thickening of tariff and non-tariff barriers at international boundaries.
- Enforcement. Canada has announced new security measures and the allocation of up to $1.3 billion to secure its border. This was part of a fall economic statement and appears to be designed to address concerns identified by president-elect Trump. A focus in on bolstering the Canada Border Services Agency’s capability respecting the inspections Canada is not use to illegally divert Chinese goods into the US.
- Risk management strategies. Many businesses are preparing for an uncertain future by assessing their options and potential next steps. Areas of focus include: monitoring regulations, identifying which inputs and finished goods might be most at risk for tariff increases; possible contract adjustments to address tariff fluctuations; supply chain diversification; and making tariff exclusion applications. Firms that review their circumstances now may be best able to deal with changes in the future.