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A vital trade partnership at risk

Canada and the United States share one of the most dynamic and integrated trade relationships in the world. With the longest undefended border between any two nations, our economies, supply chains, and industries are deeply intertwined. Every day, billions of dollars in goods and services cross the border, supporting businesses, jobs, and communities on both sides.

Despite nearly four decades of successive free trade agreements, on February 1, 2025, President Donald Trump announced sweeping tariffs on Canadian goods, imposing a 25% tariff on virtually all imports and a 10% tariff on Canadian energy. The White House framed the move as necessary, citing concerns over drug trafficking and border security. In response to the U.S. tariffs, the Government of Canada implemented retaliatory measures, targeting $30 billion in U.S. exports. A second round of tariffs, initially expected to impact $125 billion in U.S. exports, was set to follow. Businesses across multiple industries scrambled to assess the impact on finished goods, raw materials, and packaging.

By end of day February 3, President Trump and Prime Minister Trudeau announced a one-month pause on all previously announced tariffs, citing ongoing negotiations. While this delay provides temporary relief for businesses on both sides of the border, the underlying issues remain unresolved.

Latest Update: Tariff Developments and Canadian Countermeasures

The trade situation between Canada and the United States remains volatile, with significant developments unfolding over the past week.

On March 3, U.S. President Donald Trump confirmed that 25% tariffs on virtually all Canadian goods and 10% tariffs on Canadian energy exports would take effect at 12:01 AM EST, March 4. This announcement came after weeks of speculation and dashed hopes for exemptions or reductions, with President Trump stating there was “no room left” for further negotiations.

In response, Finance Minister Dominic LeBlanc announced Canada’s retaliatory tariff package on March 4, targeting $30 billion in U.S. imports with immediate 25% tariffs and issuing a notice of intent for a second phase of tariffs on an additional $125 billion in U.S. goods, pending further consultation. The Government of Canada also introduced a remission process to grant relief in exceptional cases where alternative sourcing is not feasible.

On March 6, President Trump announced a deferral of U.S. tariffs on goods under CUSMA until April 2, prompting Canada to pause its second phase of countermeasures until the same date.

Current Status of Canadian Measures:

Canada’s March 4 tariffs on $30 billion of U.S. imports remain in effect.
The consultation period for the second phase of countermeasures (on $125 billion of U.S. imports) is extended until April 2.
The remission process remains available for businesses seeking tariff relief.

Recognizing the economic strain, the federal government has launched initial business support measures, with more expected if trade tensions escalate.

FHCP continues to closely monitor developments and engage with policymakers on both sides of the border. We remain committed to advocating for a long-term solution that protects Canadian manufacturers, businesses, and consumers while ensuring stable trade relations with the U.S.

Tariffs create economic instability

Tariffs on Canadian goods and energy were framed as a way to protect domestic industries, but in reality, they disrupt economic stability, drive up prices, and create job uncertainty on both sides of the border. The Canada-U.S. trade relationship thrives on deeply integrated supply chains that keep goods affordable and businesses competitive. Trade barriers only weaken economic growth and put affordability at risk.

Rising costs for essential goods

For the food, health, and consumer products sector, these tariffs increase costs on everyday essentials—groceries, personal care items, household products, and over-the-counter medications. At a time when affordability is already a major concern, families and businesses alike are feeling the strain. Small and medium-sized businesses may be forced to cut jobs, reduce operations, or pass higher costs onto consumers.

Retaliatory tariffs add to the pressure

In response to U.S. tariffs, Canada has announced its own countermeasures, which, if implemented, will further raise costs on critical U.S. imports. This escalates inflationary pressures, making everything from raw materials to finished goods more expensive for businesses and consumers alike. Instead of strengthening economies, escalating tariffs only increase financial burdens.

A better path forward

Rather than imposing trade barriers, Canada and the U.S. must work together to reinforce supply chain resilience, attract investment, and protect North American competitiveness. FHCP continues to advocate for a long-term, cooperative solution that eliminates harmful tariffs and ensures fair, open trade that benefits businesses, workers, and consumers.

How Canada-U.S. Trade Powers Both Economies

Every day, over US$2.5 billion in goods and services crosses the Canada-U.S. border.

Canada buys more U.S. goods than China, Japan, and Germany combined, making it the largest export market for the U.S.

Canada is the #1 export market for 36 states and a top-three market for 46 states. 43 states export over US$1 billion to Canada annually.

About 70% of Canadian exports to the U.S. are used in making other goods, supporting North American manufacturing.

In the first nine months of 2024, over C$800 billion (US$600 billion) in goods crossed the border.

When including services, total trade reached C$910 billion (US$683 billion)—the equivalent of C$3.6 billion moving between Canada and the U.S. every single day.

Trade, Tariffs & Truth: What Canadians Need to Know

As tariffs threaten supply chains and affordability, FHCP is actively engaging with policymakers, media, and industry leaders to push back against harmful trade barriers. We’re committed to ensuring that businesses, workers, and consumers understand the real impact of these policies—and why simply buying "Made in Canada" is not a viable solution.

Through media appearances, public statements, and direct advocacy, we’re dispelling trade myths and reinforcing the value of a strong Canada-U.S. partnership. Read our full statement on tariffs to learn more about our position and ongoing efforts, as well as our position on simplistic “Buy Canadian” campaigns that may unintentionally mislead consumers and disrupt Canada’s integrated supply chains.

Media Spotlight: Clearing Up the Confusion

Misinformation is fueling confusion about tariffs and “Buy Canada” campaigns. FHCP CEO Michael Graydon breaks it down:

📢 Why tariffs won’t send grocery prices soaring—but will cause economic disruption.

🔗 Trump’s tariffs will cause chaos — but your grocery bill won’t spike: here’s why (Toronto Star, Feb. 4, 2025)

📢 What “Made in Canada” really means—and why shopping local requires a closer look.

🔗 Made in Canada vs. Product of Canada: What these labels mean and how to make sure you’re buying Canadian (Toronto Star, Feb. 3, 2025)

Watch: The Unintended Consequences of #BuyCanadian

Some internationally owned brands manufacture in Canada, creating jobs and investing in local communities. Meanwhile, some “Canadian” brands source from abroad. Michael Graydon unpacks the complexities of the #BuyCanadian movement on CTV National News.

🔗 Watch the full segment on CTV News

Get the Facts: Be an Informed Shopper

Viral lists don’t always tell the full story. FHCP EVP Errol Cerit urges consumers to seek facts over hashtags and understand how global companies manufacturing in Canada fuel jobs, investment, and economic resilience.

🔗 Read Errol’s insights on LinkedIn

Trade, Trust & Transparency: What Members Need to Know

As businesses navigate rising costs and shifting trade dynamics, understanding product origin claims is increasingly important. Canadian consumers are showing growing interest in locally made products, and FHCP members are actively seeking clarity on what qualifies as “Made in Canada” versus “Product of Canada.”

➡️ Made in Canada vs. Product of Canada: What You Need to Know — In this exclusive insight from FHCP Associate Member McCarthy Tétrault, get a clear breakdown of these definitions, the key compliance considerations, and what your business needs to know (requires an FHCP member log-in to view).

Additional Resources

🔗 U.S. Tariffs and Canadian Countermeasures – Norton Rose Fulbright provides a legal perspective on the impact of newly imposed tariffs and Canada’s response strategies. Read more here.

🔗 Trade Turbulence Overview – Gowling WLG explores the broader trade landscape, offering insights on shifting policies and business implications. Learn more here.

🎤 KPMG Webinar: Navigating an Uncertain Trade Landscape – Featuring insights from the Honourable Bill Morneau (Former Minister of Finance for Canada), Dan Kelly (President and CEO of CFIB), and Greg Duggan (CEO and Co-Founder of Alcorn Partners), this discussion covers how businesses are adapting to the current trade environment and strategies for resilience. Watch the webinar.

📊 Numerator Webinar: Consumer Reactions to Tariffs – This session covers macroeconomic trends and consumer sentiment, including how Canadians perceive tariffs and their impact on purchasing decisions. Future updates will include new survey data on Buy Canadian sentiment and brand perceptions. Watch the webinar.

Canada–U.S. Trade Relations