Tariff FAQs: What Canadian businesses need to know

Canadian exporters are navigating a rapidly changing trade environment, following the collapse of Canada-U.S. trade negotiations and a new round of tariffs from both countries. 

On Aug. 22, the United States imposed a 50% tariff on approximately $27.6 billion of Canadian goods under Section 338 of the U.S. Tariff Act of 1930. In response, Canada announced matching counter-tariffs on about $27.6 billion of U.S. imports, effective Sept. 8. It also announced $7.5 billion in support for Canadian workers and businesses affected by the trade dispute. These measures cover steel, dairy, appliances, agricultural equipment, pulp and paper and electronics.

The latest tariff actions have raised questions for exporters about costs, market access, eligibility under the Canada-United States-Mexico Agreement (CUSMA) and business planning. This article answers frequently asked questions (FAQs) about tariffs and outlines practical steps businesses can take to strengthen their competitiveness at home and abroad. 

Canadian companies may be eligible for government programs, export financing, insurance products and other solutions designed to help businesses navigate periods of trade disruption and uncertainty. 

In March 2025, the federal government announced $6.5 billion in support for companies affected by U.S. tariffs on Canadian goods. Then, on Aug. 25, 2026, it announced additional support measures for Canadian workers and businesses alongside retaliatory tariffs on certain U.S. imports, including a new $500-million liquidity stream through BDC’s Pivot to Grow program, $2 billion through the Canada Strong Diversification Fund and $3.5 billion in support for workers and employers.

The recent measures build on nearly $25 billion in previously announced, tariff-related support and include new financing, liquidity and workforce-support measures to help businesses adjust to prolonged trade disruption.

EDC’s Trade Impact Program

Export Development Canada’s (EDC) Trade Impact Program (TIP) was launched in 2025 to help eligible exporters navigate trade disruptions and increased market uncertainty.

Designed to facilitate up to $5 billion in additional financing, insurance and working capital support, TIP helps exporters facing challenges related to tariffs, market disruption and supply chain uncertainty. Since its launch, TIP has deployed more than $3 billion in support through 6,000 transactions, helping more than 800 Canadian companies.

In response to the current trade environment, EDC is strengthening TIP to support a greater number of businesses, including small- and medium-sized companies affected by U.S. tariffs. As part of these enhancements, EDC will take on additional risk to help more businesses access TIP support as they adapt to changing trade conditions. The program includes an envelope of $700 million in direct financing with flexible terms and conditions designed to complement those offered by the customers’ financial institutions.

In addition to financial solutions, EDC provides market intelligence, trade expertise and risk-management support to help businesses strengthen resilience, manage uncertainty and explore opportunities in new markets.

Businesses concerned about the impact of tariffs on cash flow, customer demand, supply chains or international expansion should contact their EDC relationship manager to learn what support may be available. 

A tariff is a tax imposed by a government on imported goods. Tariffs increase the cost of products entering a country and may be used to protect domestic industries, encourage local manufacturing, or achieve policy objectives.

For exporters, tariffs can influence:

• Product pricing 
• Demand in foreign markets
• Competitive positioning
• Supply chain decisions
• Market expansion strategies 

Why exporters should care

Even if your company doesn’t directly pay a tariff, the impact can still be significant. Customers may delay orders, suppliers may increase prices and buyers may look for alternative sources. Understanding where tariff costs enter your value chain is an important first step to protecting sales, margins and customer relationships.

“The current tariff environment is creating additional uncertainty for businesses that rely on cross-border trade and integrated North American supply chains. As trade conditions evolve, exporters will need to closely monitor policy developments, assess their exposure and understand how changes could affect their costs, customers and market opportunities,” says EDC’s senior economist Prince Owusu. 

Tariff actions over the last few months have increased uncertainty for many Canadian companies operating internationally. Several sectors, including manufacturing, automotive, steel, aluminum, forestry and agriculture, have experienced increased costs and supply chain disruptions. For more on how tariffs, investment trends and the evolving trade environment are affecting the region, see EDC’s North American economic outlook. 

Business impacts may include:

Increased operating costs

Imported components and raw materials may become more expensive. For exporters, this can raise production costs and force difficult decisions about whether to absorb the increase or pass it on to customers.

Reduced competitiveness

Higher prices can make products less attractive compared to local alternatives. This can make it harder for exporters to win new business or maintain existing contracts in price-sensitive markets.

Supply chain disruption

Tariffs often require businesses to source new suppliers or redesign procurement strategies. Exporters may need to act quickly to avoid delays, protect delivery commitments and maintain customer confidence.

Delayed investment and expansion decisions

Many organizations postpone expansion and capital investments when trade conditions become uncertain.  

Tariff exposure varies by sector and market:

Agriculture and agri-food

Agriculture remains vulnerable because of its dependence on cross-border trade and global commodity markets. Certain Canadian food products have been affected by retaliatory measures in international markets. 

Automotive

The automotive sector remains closely integrated across North America, making tariffs particularly impactful for production costs and investment decisions.

Manufacturing

Machinery, industrial equipment, electronics and consumer goods manufacturers often rely on integrated supply chains that may cross multiple borders before a product reaches the customer.

Critical minerals and energy

Canada’s energy and critical mineral sectors can become focal points during periods of trade tension because of their importance to North American supply chains and manufacturing.

Steel and aluminum

Steel and aluminum producers continue to face tariff-related challenges that affect both raw materials and downstream products. 

Forestry and lumber

Canadian lumber producers have long faced trade challenges in the U.S. market, where tariffs and duties can significantly affect competitiveness.

Start by identifying your product’s Harmonized System (HS) code. HS codes are internationally recognized product classifications used by customs authorities to determine duties, tariffs and trade agreement eligibility. 

Helpful tools

Use the following resources to assess tariff exposure:

• Canada Tariff Finder
• Canada-U.S. Trade Tracker
• Tariff Tracker
• Trade Commissioner Service (TCS)

These tools can help you understand:

• Applicable tariffs
• Preferential tariff rates
• Market-specific requirements

Rules of origin requirements

Many Canadian exporters continue to qualify for preferential treatment under CUSMA when they meet rules of origin requirements. However, recent U.S. tariff actions have created uncertainty around the trade environment, making it important for exporters to understand both their tariff exposure and their eligibility under CUSMA.

What should Canadian exporters do when tariffs change suddenly?

Start by assessing whether the announced tariffs affect your products, customers, suppliers, or cross-border operations. Confirm product classifications, review CUSMA eligibility, model potential cost impacts and communicate with customers and suppliers about any changes that could affect pricing or delivery. 

Businesses that prepare contingency plans before tariffs take effect are often better positioned to respond quickly when trade conditions change. Regularly monitoring sources such as EDC’s Global Economic Outlook can help exporters understand emerging risks and opportunities in the global trade environment.

Businesses should stay informed about government announcements and implementation timelines. Canada announced retaliatory measures on Aug. 25, in response to the latest U.S. tariffs, underscoring how quickly trade policies can change. 

How can exporters reduce tariff exposure?

Tariffs can’t always be avoided, but their impact can often be reduced.

Diversify export markets

Businesses heavily dependent on a single market may face greater risk when trade policies change. Exploring opportunities in Europe, Asia-Pacific markets and other international regions can reduce dependence on any one market. 

Reassess supply chains

Review your supplier network to determine whether alternative sourcing strategies can reduce exposure.

Questions to ask:

• Are critical inputs concentrated in one region?
• Are there alternative suppliers?
• What costs would be involved in changing suppliers?

Strengthen contracts

Review customer and supplier agreements to understand:

• Pricing adjustment clauses
• Force majeure provisions
• Cost-sharing arrangements
• Renegotiation mechanisms

Before amending international contracts, exporters should speak with qualified legal counsel to ensure any changes are appropriate, enforceable and aligned with the rules that apply in each market.

How can Canadian companies build a tariff mitigation strategy?

A tariff mitigation strategy helps businesses prepare for policy changes before they affect operations.

Step 1: Understand your exposure

Map products, markets, customers and suppliers impacted by tariffs.

Step 2: Model financial scenarios

Evaluate the potential impact of:

• 10%-tariff increases
• 25%-tariff increases
• Lost market access
• Input cost increases

Step 3: Evaluate alternatives

Assess:

• Supplier diversification
• Manufacturing alternatives
• Market diversification
• Product redesign opportunities

Step 4: Strengthen cash flow

Working capital becomes increasingly important during periods of tariff uncertainty because cost increases, payment delays and changing customer demand can put pressure on day-to-day liquidity.

To protect cash flow, exporters should evaluate:

• Accounts receivable risk
• Customer concentrations
• Financing requirements
• Currency risks

If tariffs increase buyer costs or create uncertainty in a market, exporters should consider how non-payment or delayed payment could affect their cash position. For example, EDC credit insurance can help protect international receivables when a foreign customer doesn’t pay, giving exporters more confidence to continue selling internationally during periods of disruption.

Exporters should also assess whether they have enough working capital to manage higher input costs, longer payment cycles, or new market development expenses. EDC’s working capital solutions can support businesses that need additional financial flexibility to maintain operations and pursue growth while managing tariff-related uncertainty.

How do tariffs affect international growth?

Tariffs don’t just create challenges. They often encourage businesses to strengthen their export strategy. Many successful exporters use periods of disruption to:

• Pursue new markets
• Expand distribution networks
• Develop new products
• Increase operational efficiency
• Strengthen supply chain resilience

Companies that adapt early often emerge better positioned for long-term growth because they use tariff disruption as a catalyst to reassess markets, strengthen operations and reduce dependence on any single customer, supplier or region. 

By addressing these challenges proactively, exporters may uncover more resilient supply chains, enter higher-potential markets and build a stronger foundation for sustainable international growth.

Action plan

Immediate actions

• Identify products affected by tariffs
• Confirm HS classifications
• Assess free trade agreement eligibility
• Review current customer exposure

Short-term actions

• Build tariff scenarios into financial forecasts
• Assess alternative suppliers
• Review customer contracts
• Evaluate financing requirements

Long-term actions

• Diversify markets
• Strengthen supply chain resilience
• Invest in trade intelligence
• Integrate tariff risk into strategic planning

Exporter scenarios

Manufacturer exporting industrial equipment

A Canadian manufacturer selling into a key international market discovers that new tariff costs are affecting customer demand and making its products less price competitive.

Actions:

• Verify free trade agreement eligibility
• Evaluate alternative distribution options in nearby or lower-risk markets
• Strengthen pricing strategy

Food exporter

A Canadian food processor faces changing trade conditions in a key international market.

Actions:

• Diversify export destinations
• Reassess sourcing strategy
• Monitor regulatory changes
• Develop alternative buyer relationships

Technology company

A software company entering new international markets uses trade uncertainty as a catalyst for diversification.

Actions:

• Expand globally
• Reduce dependence on a single market
• Increase recurring revenue sources
• Strengthen market intelligence capabilities

How do tariffs affect Canadian exporters?

Tariffs can increase costs, affect product pricing, reduce competitiveness and disrupt supply chains. Exporters who understand their exposure and proactively develop mitigation strategies are often better positioned to maintain growth during periods of trade uncertainty. 

Can Canadian exporters avoid tariffs under CUSMA?

While many Canadian exports continue to qualify for preferential treatment under CUSMA, exporters should remember that compliance doesn’t insulate every product from tariff-related costs or trade policy uncertainty. Understanding both tariff exposure and compliance requirements remains essential. 

The federal government has a dedicated CUSMA compliance support hotline 1-833-760-1167, which operates Monday to Friday, from 7 a.m. to 8 p.m.

How can a business determine whether its products are subject to tariffs?

Companies should start by identifying their product’s HS code, then use resources such as the Canada Tariff Finder and Trade Commissioner Service to evaluate applicable tariffs, preferential rates and trade agreement benefits. If they need support interpreting tariff requirements, confirming product classifications, or understanding documentation requirements, exporters can use EDC InList to find a customs broker and freight forwarder.

Why should Canadian exporters diversify beyond the U.S. market?

Market diversification can reduce dependence on a single destination, improve resilience and create new growth opportunities. Businesses that explore multiple international markets may be better positioned to navigate future trade disruptions.

How can Canadian exporters stay competitive amid tariff uncertainty?

Trade tensions between Canada and the United States continue to evolve and tariff policies can change quickly. While no business can control trade policy, exporters can take steps to understand their exposure, strengthen supply chains, diversify markets and build financial resilience.

Companies that plan ahead are often better positioned to adapt to changing trade conditions and pursue international growth opportunities, regardless of how the tariff environment evolves.

New to EDC? Take a quick assessment to discover the products and services that fit your business.

Already an EDC customer? Contact your EDC relationship manager or call 1-800-229-0575 for support navigating North American market conditions.