News and Insights

The Impact of Tariffs on Canada: A Call for Economic Diversification

March 9, 2025

Sector:

Canada’s economy has long been shaped by our close trade relationship with the United States. However, ongoing trade tensions and the uncertainty surrounding tariffs have made it increasingly clear that we must reduce our over-reliance on any single trading partner.

While the situation remains fluid, businesses cannot afford to wait for a resolution. Uncertainty leads to supply chain disruptions, rising costs, and unpredictable delays. Regardless of how tariff negotiations evolve, Canada must take steps to strengthen its economic resilience by balancing self-reliance with expanded global trade opportunities.

The Path Forward: A New Trade and Economic Strategy

To ensure long-term stability, Canada must:

  • Enhance Self-Reliance – Encouraging domestic production, innovation, and supply chain independence.
  • Eliminate Provincial Barriers – Reducing interprovincial trade restrictions to create a stronger national economy.
  • Expand Global Trade – Strengthening relationships with emerging markets and securing new trade agreements.

These shifts will have significant policy implications, likely leading to changes in tax policies, trade subsidies, grants, and incentives designed to support Canadian businesses in adapting to the evolving landscape.

Support for Businesses: Incentives & Grants

The Canadian federal government recently announced a $6.5 billion aid package to support businesses affected by the ongoing trade war with the United States. This package includes:

  • $5 billion over the next two years to help businesses cope with decreased U.S. sales and explore new global markets.
  • $500 million for business loans ranging from $200,000 to $2 million at preferred interest rates.
  • $1 billion specifically for loans to the agricultural sector.
  • Temporary changes to the employment insurance program to help businesses retain workers by reducing work hours and compensating employees for lost time or wages.

This initiative aims to mitigate the adverse effects of tariffs and support economic stability.

The introduction of new and expansion of existing support programs including:

  • Work-Sharing Program – Helps businesses retain employees during economic downturns by allowing staff to work reduced hours while receiving EI benefits.
  • Clean Technology Investment Tax Credit – Encourages businesses to invest in clean energy and sustainable technologies.
  • CanExport SMEs and Innovation Program – Supports Canadian businesses looking to expand into international markets by providing funding for market research, travel, and promotional activities.
  • Scientific Research & Experimental Development Program (SR&ED) –Tax incentives are intended to encourage businesses to conduct research and development in Canada.

These are just a few of the many programs currently available. As policies evolve, new incentives will emerge to support innovation, manufacturing, and export growth.

Stay Informed & Prepared

At Kreston GTA, our team is actively monitoring changes in government policies, tax incentives, and trade programs. We are committed to keeping businesses informed about new opportunities and how they can benefit.

For businesses looking to navigate these changes effectively, now is the time to explore available programs and take proactive steps toward economic resilience. If you have questions about eligibility for tax incentives, grants, or other support measures, reach out to our team today.

info@krestongta.com