FAQ | How Can Businesses Cope with Tariffs During the Trump Era?

Business leaders are asking numerous questions in light of the uncertainty caused by U.S. measures and the imposition of tariffs in particular.

Below are our experts’ answers to the most frequently asked questions.

Which business sectors are most likely to be affected by tariff threats?

In Québec, the primary sectors that engage in export activities to the U.S. are:

You might not know that close to half of all Canadian imports originate from the U.S. Therefore, higher tariffs will also impact our neighbours to the South.

Check out our article containing advice on how to cope with this period of uncertainty.

What are tariffs and how do they affect businesses?

A tariff is a tax imposed by a country on imported goods. In this case, the U.S. imposed a tax which will be paid by the importer. This will raise prices in the U.S. and impact Canadian exporters.

How do you do a diagnostic of your business?

Understanding the profitability of each product, client and sector is essential. A performance diagnosis may identify that between 10% and 30% of clients are not profitable. To find out more, read our FAQs about business profitability.

Which financial indicators should be monitored?

Organizations should monitor debt ratios, solvency and working capital management which includes the timelines for both client debt recovery and release of stocks. To find out more, consult our FAQs about business profitability.

How can businesses reduce the impact of tariffs?

Organizations could consider creating subsidiaries in the U.S. and transferring certain functions there. Companies that already have a footprint in the U.S. could restructure their operations by converting sales offices to distributors, for example, and assigning more responsibilities to their subsidiaries. This would justify a review of transfer price policies and could reduce the value for duty. Find out more about transfer prices here.

How important are financial planning and forecasts in the current context?

Making detailed financial forecasts is crucial. Every department should be included in the budget exercise and scenarios should be developed for different tariff levels.

How can you broach the subject with bankers?

Transparency is essential during discussions with bankers. You should present a clear and structured diagnosis of the current situation and propose realistic action plans to secure their support.

How can you know if your company will be affected by tariffs?

In order to analyze and understand how your company may be impacted by tariffs, start by listing your main clients and pinpointing those with whom you signed U.S. contracts. Then you can evaluate the financial terms and risks (sales, gross margin and cashflow) related to these agreements. You can also review your supplier list and explore local or international alternatives to reduce your dependence on the U.S.

Which assistance measures are available for businesses?

All the business assistance programs are listed here.

Which services offered by our firm could help you in the short term to transform your organization following tariff threats?

Our firm offers support services for all aspects of your business. We have in-depth expertise in corporate finance and governance, taxation, financial and organizational performance, digital transformation and recovery, in particular. Read more about the services that we offer or reach out to us. We’ll put you in contact with the team of experts best suited to your needs.