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Strategies for Canadian businesses to help minimize exposure to new tariffs

Inherent volatility of trade policies requires careful planning

August 24, 2026
#
Federal tax Business tax International tax

While trade negotiations and the imposition of tariffs are inherently volatile in nature, there are strategies that Canadian businesses could consider to potentially minimize their exposure.

The latest U.S. tariffs are tied to Canadian motor vehicles, alcoholic beverages and dairy products, but the list of affected products extends beyond these categories and includes a broader range of Canadian-origin imports. The scope of these U.S. tariffs could change, while Canada announced its intentions to respond with dollar-for-dollar tariffs on U.S. goods effective Sept. 8, 2026.

The two countries are still expected to conduct broader trade negotiations despite these new tariffs—particularly after the U.S. declined to renew their free-trade agreement in its current form. It’s critical to remember that the Canada-United States-Mexico Agreement (CUSMA) remains in effect despite this decision; this adds another layer of complexity to any tariff decisions that emerge from either side.

Amid this uncertainty, businesses should consult with the appropriate advisors and consider the following strategies: 

  • Communicate with customers: Canadian companies serving the U.S. market should consider engaging with their customers to assess potential pricing, sourcing and contractual implications as these tariffs take effect.

  • Review classification of goods: The newly announced tariffs only affect goods that are classified under certain harmonized tariff classification codes used for customs purposes. Businesses should first confirm the customs classification of the affected imports to determine whether the tariffs apply. Businesses may also be able to reduce duty liability through tariff engineering; this involves making lawful changes to a product's design, materials or characteristics that may affect its tariff classification when imported.

  • Determine origin of goods: The new tariffs only apply to goods originating in Canada. Businesses should review the origin determination for affected imports to assess whether the tariffs apply.

  • Re-asses the valuation of goods: The newly announced tariffs are 50 per cent of the value of the product for customs purposes. Importers may be able to lower the value of their goods—and the tariffs by extension—by reviewing the costs included in that valuation, as well as whether they qualify for a different valuation method. In relation to the valuation of the product, transfer pricing applies to related party transactions to ensure the price of the good is equivalent to the price in an arm’s length transaction. Businesses should revisit their transfer pricing strategies so that the lowest defensible price is used.

  • Make use of bonded warehouses, foreign- or free-trade zones and temporary import bonds: These mechanisms allow importers who meet certain requirements, such as limitations on work performed on the goods, to delay tariffs until the goods are distributed into the local market—or bypass tariffs where the goods are exported.

What products are affected?

Unlike some previous tariff announcements, there are no exceptions for goods that are considered to originate under CUSMA.

The following is a breakdown of the new 50 per cent U.S. tariffs on Canadian goods that took effect on August 22, 2026. The tariffs were announced through three proclamations each related to separate issues raised by the U.S. in the trade negotiations.

Motor vehicles proclamation

Affected goods include those beyond the scope of motor vehicles and also include:

  • Plant and animal products.
  • Forestry and paper products.
  • Chemicals, plastics, adhesives and paint.
  • Clothing, fabric and various consumer goods.
  • Machinery and electronics.
  • Art and collectables.
Alcoholic beverages proclamation

Beverages such as beer, wine, and whisky are included in the new U.S. measures, along with related flavouring products and packaging.

Dairy proclamation

Dairy-derived products, such as whey, and industrial ingredients used in food processing, pharmaceuticals or cosmetics are included in the new U.S. measures.

Affected goods include those beyond the scope of motor vehicles and also include:

  • Plant and animal products.
  • Forestry and paper products.
  • Chemicals, plastics, adhesives and paint.
  • Clothing, fabric and various consumer goods.
  • Machinery and electronics.
  • Art and collectables.

Beverages such as beer, wine, and whisky are included in the new U.S. measures, along with related flavouring products and packaging.

Dairy-derived products, such as whey, and industrial ingredients used in food processing, pharmaceuticals or cosmetics are included in the new U.S. measures.

Other U.S. tariffs currently in effect

The following goods, as of the publication of this article, are subject to product-specific tariffs:

  • Steel, aluminum and derivatives.
  • Non-CUSMA-compliant autos and light trucks, and non-U.S. content of CUSMA-compliant autos and light trucks.
  • Non-CUSMA-compliant auto parts.
  • Non-CUSMA-compliant medium- and heavy-duty trucks, and non-U.S. content of CUSMA-compliant medium- and heavy-trucks.
  • Buses.
  • Copper (except raw materials).
  • Softwood timber and lumber.
  • Upholstered wooden furniture, kitchen cabinets and vanities.
  • Semiconductors.

The U.S. previously imposed 10 per cent tariffs on non-CUSMA compliant goods.

Goods within scope of the tariffs listed in this section, as well as the newly imposed 50 per cent tariffs, appear to be subject to a combined tariff rate.

Longer-term considerations

Given the fluid nature of trade negotiations, Canadian businesses should evaluate longer-term opportunities to broaden their supply chains and customer bases. These steps can help businesses reduce reliance on any single market and build greater resilience against future disruptions.

RSM contributors

  • Farryn Cohn
    Farryn Cohn
    Senior Manager
  • Bryan Lathbury
    Bryan Lathbury
    Manager
  • Cassandra Knapman
    Manager

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