The 30-day hiatus in the Canada-U.S. trade tensions offers a critical window for Canadian businesses to assess and bolster their resilience.
It is imperative that business leaders utilize this time as an opportunity to start on a path of future-proofing operations and readying to meet the moment in areas such as:
- Responding to government-driven economic stimulus
- Positioning to take advantage of any breakdowns in internal trade barriers
- Opening new markets and diversifying supply chains
Companies that leverage this reprieve will have a competitive advantage essential to succeeding in the face of substantial global economic challenges. BDO has provided a checklist below, which outlines some of the key steps to developing a resilience strategy.
Checklist
Assessment and analysis
- Conduct a comprehensive risk assessment, including:
- Map your supply chain to unearth key dependencies and concentration risks
- Calculate the percentage of your revenue at risk due to potential tariff changes
- Identify potential risks specific to your industry related to trade disputes
- Review your current supply chain for dependencies and vulnerabilities, especially related to goods—down to the ingredients, parts, and materials affected by potential tariffs
- Evaluate how changes in tariffs would affect your operations and costs
- Assess cash flow, liquidity, and price elasticity to ensure resilience against unexpected cost increases, including an assessment of lender relationships, if applicable
- Create a Tariff Advisory Committee, potentially comprised of lawyers, lenders, and accountants, alongside COO, CFO, and ownership to facilitate rapid response to risks and opportunities
Strategic planning
- Develop scenario plans, mapping potential policy changes and impacts on your operations, including one based on the potential of 25% tariffs
- Explore supply chain diversification:
- Identify alternative suppliers or sourcing options to reduce dependency on high-risk regions
- Explore options for reshoring or nearshoring to mitigate risks
- Review government support options, including:
- Canadian remission applications for potential relief from surtaxes
- Innovation credits
- Reduction in inter provincial trade barriers
- Assess programs like Canada's Trade Gateway for resources to accelerate access to new markets including those in Asia and Europe
- Engage with industry associations and governmental lobby groups to advocate for policy changes that can mitigate the impact of tariffs
Operational enhancements and efficiencies
- Operations optimization
- Identify areas where processes can be streamlined to increase agility
- Explore tariff engineering opportunities to qualify for reduced-duty classifications
- Focus on shortening delayed payment times to improve cashflow
- Identify areas where sales cycle can be shortened
- Assess potential for pre-payment of goods at lower tariff rates
- Explore hedging opportunities in the event of the US dollar strengthening
- Implement scenario analysis to optimize supply chains within current constraints
- Develop strategies to adapt operations in response to potential tariffs
- Technology integration
- Explore AI-driven predictive analytics for end-to-end supply chain visibility
- Implement systems for real-time monitoring of trade developments
Legal and compliance
- Insert tariff adjustment clauses in contracts
- Engage with legal experts to assess the opportunity to negotiate terms with suppliers and customers
- Ensure compliance with current and potential future trade regulations
- Review tariff classifications for your products
Implementation
- Create a plan to keep employees, customers, and partners informed about potential impacts and mitigation efforts
- Communicate with lenders, if applicable
- Consolidate all findings and strategies into a comprehensive resilience plan
- Begin implementation of the most critical and immediately actionable items
Summary
This checklist is intended as an aid to support immediate action. Leaders need to monitor the situation and be prepared to adapt strategies as the trade landscape evolves.
Let us talk about how we can help you take the first step in navigating ongoing trade challenges. Contact our team of tariff readiness advisors today to get started.
The information in this publication is current as of February 10, 2025.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.