How are Canadian companies managing through uncertainty, and what can they do next?
Canadian businesses are feeling the pressure of US tariffs and evolving trade policies, but organizations are showing resilience in the face of uncertainty. How exposed are Canadian organizations to trade pressures, and what are they doing in response?
Our PwC Canada Tariff Impact Survey, conducted with 283 business leaders across the country from March 4–10, 2025, offers insights into how Canadian organizations are managing through the uncertainty. It also highlights some of the opportunities and no-regrets moves available to enhance competitiveness and preserve and create value regardless of how the trade and tariff situation plays out.
Tariff impacts on Canadian businesses and the economy
Many respondents are feeling the impacts of trade uncertainty directly: 78% say their businesses are at least moderately impacted by the tariffs, with 31% reporting high exposure. As we can see in the chart below, top impacts include an inability to plan amid market uncertainty (72%), as well as increased input costs and supply chain disruptions (69%).
In what ways do you think your company will be exposed to US tariffs?
Overall market uncertainty around US policy may impact investment activity in Canada, at least in the short term. But our survey also shows that, looking further out, many respondents are still considering moves like mergers and acquisitions (M&A) as a key opportunity to strengthen their businesses.
In the meantime, almost all survey respondents (97%) are expecting Canada’s economic growth to decline this year, which our analysis suggests could happen depending on how the trade uncertainty plays out. Even short of 25% tariffs being applied to all Canadian exports to the United States, there are signs that ongoing volatility and uncertainty have been having an impact on the Canadian economy so far and will continue to constrain economic growth.
If broad-based tariffs were to remain in place for five to six months, our analysis points to a slowdown of the economy that could eventually lead to a recession in Canada and the United States. But negative economic consequences will vary by region and will depend on the severity of the tariffs, how many goods face them, the degree of countermeasures and the duration of time they remain in place.
Quantify your exposure
Our Tariff Impact Assessment tool seamlessly connects to your trade data to provide a comprehensive view of specific tariff impacts and mitigation opportunities for your business.
Short-term actions to protect the business
Given the high degree of uncertainty around the tariffs in recent months and the expectations of significant economic and business impact, Canadian organizations have been working hard to prepare. But there’s still work to be done, with 66% of survey respondents saying they’re only somewhat prepared to respond to US tariffs. Another 12% say they’re not prepared at all.
While preparation is challenging due to the frequency of policy shifts, a critical first step is to conduct a comprehensive scenario analysis that includes quantifying a company’s exposure to trade measures and the resulting financial impacts. With these insights in hand, companies can look to a range of actions to mitigate the impact, at least in the immediate term.
In our survey, we asked leaders about steps they’ve taken or will be pursuing. The results show supply chains are an immediate focus, with more than half (51%) switching their supplier footprints to focus on those less affected by the tariffs. Other top actions include adjusting pricing, hedging, custom and transfer pricing strategies, which 48% are considering.
Although our survey shows 20% of respondents are looking to reduce production capacity or headcount, it’s notable that recent research from organizations like the Bank of Canada has found a greater share of employers planning to pull back on hiring and employment.1 The percentage of businesses in our survey looking at headcount and production cuts was higher (27%) among respondents in one of the more affected industries, the industrial manufacturing and automotive sectors.
What actions has your organization taken or will it be pursuing?
Strengthening your financial position
Besides the more significant measures some companies may eventually have to take, they may also consider a variety of opportunities to strengthen their financial positions to withstand the tariffs. This is where actions to both understand and bolster cash flow come into play.
While many of the solutions to improve a company’s cash position involve measures with incremental impact, cumulative efforts to pay closer attention to financial details can pay off. These can include actions on the treasury side, such as undertaking a working capital review, as well as using tools to uncover financial errors, duplicate transactions and other opportunities to recover cash. We’ve outlined these opportunities, and more, in the chart below.
Companies can also look at tax levers to improve cash flow. This could mean reviewing a variety of areas, such as direct, indirect and property taxes, to make sure they’re both reducing tax costs and increasing available credits.
Further opportunities to free up resources may come from accelerating plans to repatriate cash from foreign subsidiaries. Companies can also take advantage of new government supports, such as expanded work-sharing provisions under the employment insurance program, to help manage financial pressures.
Unlock cash in your business
From our Cash Finder tool to our suite of tax review solutions, we can help you quickly free up resources.
Enabling long-term resilience
As challenging as the situation for Canadian companies is, the best response to both the tariffs and the uncertainty is to focus on actions to strengthen their businesses both now and in the long term. And our survey does show signs of resilience, with many companies expressing confidence about their future viability.
Our survey asked respondents about how long they think their organization will be economically viable, which we also asked Canadian chief executive officers about in our CEO Survey in October and November 2024. This time, 58% said they expect their companies will still be viable in 10 years, which is down modestly from 63% in our CEO Survey. The number expecting to be viable for less than one year (3%) is up slightly from the fall (1%).
The critical question is what companies will do to stay viable for the long term, an issue that’s relevant not just in the context of trade uncertainty but also given the overall need to boost Canada’s productivity and competitiveness. On that front, it’s promising to see that survey respondents are taking steps to better position themselves for the future. Examples include expanding to new markets (55%) and pursuing M&A and/or partnerships with other organizations (30%).
While a lower percentage (19%) are looking at moving production to the United States, this is still a fairly significant number that does raise concerns for the Canadian economy. It’s also notable that the percentage considering this action rises to 37% among respondents in the industrial manufacturing and automotive industries. (See “In focus: Canada’s industrial manufacturing and automotive industries,” below for more insights.)
Which of the following actions will you take to ensure the long-term viability of your organization?
Opportunities to tap new markets
For the many companies looking to tap new export markets, the good news is that Canada has multiple free-trade agreements in force with other trading partners and is the only Group of Seven country with trade deals with all other G7 members.2 Key actions to start taking advantage of other trade deals include identifying potential buyers overseas; putting in place the resources necessary to export to them; and taking steps to understand what may be very different legal and regulatory environments.
Ongoing efforts to rework supply chains are also opening up opportunities for businesses, notably as we see examples of companies moving to non-US suppliers to mitigate tariff impacts. This can include switching to suppliers in Canada. In our discussions with organizations during this period, we’ve seen instances of companies having success by refocusing on the Canadian market.
In fact, some have told us they’ve been pleasantly surprised to see how rising demand in Canada for products from Canadian companies is more than compensating for expected losses in the US market due to tariffs. Discussions about reducing interprovincial trade barriers are also promising signs of needed change in Canada that can open up opportunities for businesses to counter some of the US trade uncertainty.
Enhancing innovation and productivity
Our survey also shows about one-third of respondents are planning to take actions like investments to enhance productivity and pursuing M&A activities and partnerships with other organizations. While uncertainty has caused some companies to pause these investments, moves to boost competitiveness will be critical to enabling long-term viability as Canada navigates an evolving US trading relationship. M&A, in particular, will be a key strategy for navigating changing trade patterns and acquiring the capabilities and scale needed to build a stronger business.
Companies looking at such moves but concerned about allocating resources to do so can consider the range of government support programs available to encourage investment in productivity, innovation and market diversification. The federal government has already announced some measures, including new supports for companies looking to diversify their export markets. On the provincial front, Quebec has been particularly active with a suite of business support programs introduced so far, with other governments likely to unveil new measures as the tariff situation evolves.
It’s important to note that, in addition to new programs, companies can also turn to existing government initiatives, including tax credits and incentives, that support research and development and other key business investments. In some cases, businesses may be able to combine federal and provincial government supports, enabling them to move faster by making critical investments more financially viable.
Unlock government support
Canadian businesses can combine new relief measures with existing incentives to enhance funding
In focus: Canada’s industrial manufacturing and automotive industries
The Canadian industrial manufacturing and automotive sectors are particularly exposed to current trade uncertainty, and our survey results offer insights into the extent of the challenges they face. With their integrated supply chains in which products can cross the Canada-US border multiple times before becoming finished goods, tariff exposure is very high. In fact, 97% of respondents in these sectors said they’re at least moderately exposed to the tariffs.
Looking further into impacts of these companies’ exposures, one-quarter (24%) put their business’ viability at two years or less (compared to 15% among all survey respondents). Only 42% expect their business to exist in 10 years, which is markedly lower than the 58% finding for all companies noted above.
On the other hand, we do see signs that industrial manufacturing and automotive companies are more likely to be taking long-term steps to remain viable, as the chart below shows.
Which of the following actions will you take to ensure the long-term viability of your organization?
The fact that many of these companies are being proactive is positive. While any loss of US market access would be an undeniable challenge for many companies, this only heightens the imperative to find creative solutions to mitigate the impacts as the situation around tariffs and trade evolves.
By your side for what comes next
Our survey shows most Canadian companies are confident about their own resilience, even with the difficulties they face. By embracing some of the no-regrets moves available to protect their businesses and become even more innovative and productive, they can position themselves to navigate what’s to come.
While the current uncertainty is disruptive, we have yet to see how the US trading relationship will ultimately evolve. The challenge is for Canadian organizations to accelerate efforts to strengthen and even reinvent their businesses in the meantime, ideally helped by public policies that spur innovation and support key opportunities to diversify our markets and sectors. Canada has seen periods of successful economic and business diversification in the past, and by harnessing our financial and natural resources and competitive advantages, we can meet the moment once again.
Our teams are here to help. From tax and technology to M&A and value creation, our professionals bring deep insights across Canada’s key industries to help organizations define their next moves in difficult situations like this. Contact us to discuss what the trade challenge means for your business and how you can preserve and create value even in the face of uncertainty.
Contact us
National Managing Partner, Clients & Markets, PwC Canada
Tel: +1 514 205 5199
National Leader of Economics & Policy Practice, PwC Canada
Tel: +1 416 520 5859
Jordan Downing
Director, Corporate Strategy & Transformation, Strategy&, PwC Canada
Tel: +1-647-500-2172
Lead Client Partner and National Leader, SR&ED and Incentives, PwC Canada
Tel: +1 403 509 6373
