With a potential trade war looming between the U.S. and Canada, nine in 10 Canadian business leaders “wholeheartedly believe” that the federal and provincial governments “must stand firm in protecting Canada’s sovereignty and values” and that includes fighting tariffs with tariffs even if it hurts their business, finds a new survey by KPMG in Canada. Over eight in 10 want a targeted, dollar-for-dollar retaliatory response.

“Our poll findings reveal that Canadian business leaders believe Canada must stand firm even if it means being caught in the crossfire,” says Benjie Thomas, Chief Executive Officer and Senior Partner, KPMG in Canada.

“Nine in 10 business leaders across the country want the federal and provincial governments to take immediate steps to eliminate inter-provincial trade barriers, reform the tax system, provide incentives to onshore, and encourage Canadians to ‘Buy Canadian’ – in short, they want a stronger, more resilient country.”

While 80 per cent are now preparing or bracing for a recession, 81 per cent are willing to endure the short-term pain of retaliatory tariffs if Canada can negotiate a fair deal that protects the country’s trade-based economy, independence and sovereignty.

In a 2019 analysis, the Bank of Canada estimated a 25 per cent tariff by the U.S. on all imports from Canada and other countries, along with retaliatory tariffs, would cut global gross domestic product (GDP) by 3 per cent and Canada’s by 6 per cent. The bank will publish a new analysis of tariffs today.

With more than half (56 per cent) saying they will be forced to lay off employees if tariffs are imposed, 80 per cent agree the federal government should support Canadians whose jobs are disrupted or lost with pandemic-style aid.

KPMG just completed a survey of 250 business leaders across Canada to gauge their reaction to U.S. President Donald Trump’s tariff threats and what actions, if any, they had already taken or were planning to take. Eighty-eight per cent of the companies surveyed export or sell to the U.S. and 81 per cent say their business will be impacted by U.S. tariffs.

Key Poll Findings:                                                                                                                                          

• Nine in 10 of 250 Canadian business leaders “wholeheartedly believe” that the federal and provincial governments “must stand firm in protecting Canada’s sovereignty and values”
  • This is consistent across the country, with 96 per cent in Alberta, 90 per cent in Quebec, 88 per cent in Ontario, and 82 per cent in B.C.
• 85 per cent believe Canada should fight U.S. tariffs with retaliatory tariffs
  • 88 per cent in Quebec, 86 per cent in Ontario, 79 per cent in B.C., and 76 per cent in Alberta
• 94 per cent say Canada and the 13 premiers must show a united front to the U.S.
  • This is consistent across the country, ranging from 95 per cent in Quebec, 94 per cent in Ontario, 92 per cent in Alberta, and 88 per cent in B.C.
• 82 per cent want a targeted, dollar-for-dollar retaliatory response
• 80 per cent are preparing or bracing for a recession this year
• 60 per cent say they can withstand a prolonged trade dispute with the U.S.
• 90 per cent say it’s time to eliminate inter-provincial trade barriers
• 88 per cent want governments to encourage domestic production, onshoring where possible
• 90 per cent want government to encourage Canadians to “Buy Canadian”
• 85 per cent say the federal and provincial governments must reduce business taxes and reform the tax system to stay competitive with future U.S. tax reform
• 56 per cent say they will have to lay off employees if tariffs are implemented
• 80 per cent agree the federal government should reintroduce income supports similar to those offered during COVID to help Canadians whose jobs are disrupted or lost due to tariffs, yet 79 per cent are concerned about the related inflationary impacts of increased fiscal spending if a “bailout fund” is created

Already acting

Almost two-thirds (65 per cent) took pre-emptive action, preparing for potential tariffs by shipping goods or products to the U.S. before President Trump’s inauguration, the KPMG survey finds. Forty-eight per cent also plan to shift their investments to the U.S. and set up operations or production south of the 49^th parallel to serve the U.S. market and reduce costs.

“The new U.S. administration’s economic and trade policies are having huge ripple effects in Canada and around the world,” says Lucy Iacovelli, Canadian Managing Partner, Tax and Legal, KPMG in Canada. “There are important steps that Canadian businesses can take to prepare for trade disruption and higher costs and build resiliency.  

“No matter when or if U.S. tariffs or tax cuts take effect, now is the time to be proactive and understand your exposure and develop mitigation strategies,” she says. “Our poll findings also show that businesses are making it quite clear that they will also require tax reform to stay competitive.”

The vast majority of business leaders (86 per cent) admit potential tariffs are a “wake-up call” to improve productivity in Canada and in their business. However, most business leaders say a trade war will impact investments in technologies that would improve their productivity. An equal number are holding capital spending plans until there’s clarity on trade relations. The poll findings show that merger and acquisition activity will also be impacted, with almost six in 10 saying they will delay M&A plans for at least six months.

Additional highlights:

• 65 per cent prepared for potential tariffs by shipping goods or products to the U.S. before Inauguration Day
• Half (48 per cent) plan to shift investments or production to the U.S. to serve the U.S. market and reduce costs
• 86 per cent say President Trump’s tariffs are a “wake-up call” to improve productivity in Canada and in their business
• 81 per cent are willing to endure “short-term pain” (retaliatory tariffs) for long-term gain if Canada can negotiate a fair deal that protects its trade-based economy and Canada’s independence and sovereignty 
• 70 per cent say a trade war will force them to delay investing in technologies that would improve their productivity
• 71 per cent are shelving capital investment plans until there’s clarity on trade relations
• 58 per cent will delay merger and acquisition plans for at least six months
• 60 per cent will look to make acquisitions in the U.S. to serve their customers if tariffs are implemented
• 64 per cent will be negatively affected by additional U.S. tariffs on Chinese goods
• 72 per cent will pass costs on to their customers through increased prices, although 62 per cent will try to offset costs in other ways rather than pass them on to consumers

KPMG also asked business leaders for their opinions on retaliatory tariffs, income supports, and border and defence spending. The poll findings indicate that business leaders are proud to be Canadian, and a majority are willing to see the country use its natural resources as a bargaining weapon.

Other findings:

• Six in 10 (57 per cent) say Canada should stop oil exports to the U.S. – with some divergence in opinions across the country, ranging from 66 per cent in Ontario, 56 per cent in B.C., 52 per cent in Alberta, and 48 per cent in Quebec
• Six in 10 (60 per cent) say Canada should stop electricity exports to the U.S.
  • 64 per cent in Ontario, 63 per cent in Quebec, 62 per cent in B.C., and 52 per cent in Alberta
• Six in 10 (61 per cent) say Canada should halt critical mineral exports to the U.S.
  • 68 per cent in Ontario, 59 per cent in B.C., 56 per cent in Alberta, 55 per cent in Quebec
• Nine in 10 (89 per cent) support the strengthening of Canadian border security measures to address the U.S. government’s concerns
• 85 per cent support Canada ramping up investment in the Canadian military and Artic (NORAD) defence to address the U.S. government’s (and NATO’s) concerns

About the KPMG in Canada Tariffs Survey

KPMG in Canada surveyed 250 business leaders across Canada between January 21 to January 27, 2025 on Sago’s premier business panel, using Methodify’s online research platform. Eighty-eight per cent export or sell to the U.S. Eighty-one per cent say they will be impacted by U.S. tariffs, 11 per cent will not be impacted, and 8 per cent are unsure if the tariffs would affect them. Twenty-seven per cent of the respondents helm companies with annual revenue of between $100 million and $499 million, 23 per cent, between $10 million and $49 million, 23 per cent, between $500 million and $1 billion, 18 per cent, between $50 million and $99 million, and 10 per cent, over $1 billion.