Tariffs have had a significant impact on Canadian businesses, with a recent KPMG survey revealing that the majority of large and mid-sized businesses have had to adjust their pricing strategies. The survey, conducted among 359 business leaders and decision-makers, highlights the challenges faced by Canadian companies in the face of U.S. tariffs. Two-thirds of respondents reported making pricing adjustments to account for the additional costs associated with tariffs, while 39% made no changes. This decision often involves a delicate balance between absorbing the extra costs, reducing expenses elsewhere, or passing the burden onto consumers. The survey further indicates that 35% of businesses passed along some tariff-related costs to customers, and 31% passed on the full cost. This trend is expected to continue, with KPMG's Lachlan Wolfers suggesting that 80% of businesses will eventually pass on the costs to consumers. The current tariffs, including those on steel, aluminum, softwood lumber, automobiles, and various other goods, have already had a noticeable effect. The survey was conducted before the announcement of new 50% tariffs on Canadian dairy, alcohol, motor vehicles, cosmetics, and other goods, which could further impact businesses. The Canada-United States-Mexico Agreement (CUSMA) is also a critical factor, with 49% of businesses surveyed considering it essential for their operations. However, the survey also reveals a shift in focus towards international markets. A significant portion of businesses are planning to expand to new markets within the next one to three years, and 26% of exporters are exploring additional markets with trade deals. This shift could help Canadian businesses navigate the challenges posed by U.S. tariffs and manage the uncertainty surrounding future trade policies. In conclusion, the KPMG survey underscores the complex situation Canadian businesses find themselves in due to U.S. tariffs. While the immediate impact is clear, the long-term effects and the potential for managed uncertainty are also significant considerations. As businesses continue to adapt, the focus on international markets and trade agreements may offer a path forward, but the outcome remains uncertain until the end of the current U.S. administration.
