Short-Term Tariff Relief - But More Pain Ahead

Government rolling out support measures for businesses

‍Canada has secured a brief reprieve from U.S. tariffs, but the relief is short-lived. With new trade restrictions set to hit key industries in the coming weeks, businesses must brace for impact. President Trump has said that the U.S. is moving forward with steep tariffs on steel, aluminum, dairy, and lumber, while broader “reciprocal” tariffs are set to take effect in April. In response, Finance Canada is rolling out major support programs to help Canadian businesses weather the storm. Here’s what’s coming in the weeks ahead—and how Canada is fighting back.  

The Reprieve  

• American 25% tariffs are paused for CUSMA compliant goods until April 2.    

• CUSMA compliant goods are those that meet the “Rules of Origin” requirement as defined by the agreement. This requires a certification of origin.  

The Tariffs Ahead:  

• The U.S. is moving forward with Section 232 tariffs on Canadian steel and aluminum, set to take effect on March 12.  

• Meanwhile, President Trump has warned that a 250% tariff on Canadian dairy could hit as soon as tomorrow or early next week, along with additional tariffs on Canadian lumber  

• American “reciprocal” tariffs come into effect April 2. According to White House trade adviser Peter Navarro, these tariffs will be country-specific based on the tariffs and non-tariff barriers each nation imposes on the U.S.

Canada’s Response:  

Canada is holding firm on its 25% retaliatory tariffs on an initial $30 billion worth of U.S. goods. However, the start date for a second round of $125 billion in tariffs has been pushed from March 25 to April 2, with consultations extended until then. Finance Canada is urging businesses to submit their input as soon as possible to help shape the final measures.  

New Support For Canadian Businesses:  

To help businesses navigate the tariff storm, Finance Canada is rolling out major support:  

• Launching the Trade Impact Program through Export Development Canada.The program will deploy $5 billion over two years, starting this year, to help exporters reach new markets for Canadian products and help companies navigate the economic challenges imposed by the tariffs, including losses from non-payment, currency fluctuations, lack of access to cash flows, and barriers to expansion.  

• Making $500 million in favourably priced loans available through the Business Development Bank of Canada to support impacted businesses in sectors directly targeted by tariffs, as well as companies in their supply chains. Businesses will also benefit from advisory services in areas such as financial management and market diversification.  

• Providing $1 billion in new financing through Farm Credit Canada to reduce financial barriers for the Canadian agriculture and food industry. This lending offer will help address cash flow challenges so that businesses can adjust to a new operating environment and continue to supply the high-quality agricultural and food products that Canadians rely on.