With the fate of the Canada-United States-Mexico Agreement (
) a new survey from
shows to what extent
With
is causing concern among Canadian business leaders.
Of the 501 executives surveyed by KPMG, more than ninety percent believe the biggest risk to Canada's economy is a negative outcome from renegotiating free trade with the United States.
Eighty-eight percent said losing existing protection under CUSMA is the biggest risk to their companies, and 84 percent expect to pay some amount
even if their goods are covered by the new trade agreement.
While the vast majority of survey respondents (88 percent) agree that tariffs are having an effect, the impact has been more modest than expected. However, most leaders reported that tariffs have made their businesses less competitive.
Eighty-two percent also believe U.S. tariffs against all countries, including Canada, will remain in place.
“While the tax exemption for CUSMA-qualified goods provides a lifeline from many U.S. tariffs, the structure and rules could change under a new trade agreement in the future,” said Joy Knott, trade and customs partner at KPMG.
“Historically, the North American Free Trade Area has allowed all three countries to act against global supply chain threats and work together in a highly competitive global trading environment. However, we could see a situation where a bilateral agreement with the US replaces CUSMA in 2026 and changes the playing field,” Knott said.
Four out of five business leaders say they would support a bilateral deal with the US alone, although a trilateral deal with Mexico would be preferable. Many leaders said the cost of moving to foreign markets was prohibitive, and 73% said they could not afford the additional costs associated with such a move.
Currently, many Canadian businesses have taken short-term measures to mitigate the problems caused by the trade war. Sixty-eight percent reported that they had or planned to pass on additional costs to customers.
Another 79 percent of business leaders said they have reduced or plan to reduce their workforce over the next six months.
The survey also said 93 per cent of respondents agreed that the unpredictable nature of U.S. trade policy and the cost of access to the U.S. market are among the most pressing issues facing the Canadian economy.
“The full effect of US tariffs is only now beginning to be felt in the economy. Initially, affected businesses chose to absorb the tariffs, while going forward we expect more businesses to pass on tariff costs to end consumers,” said Lachlan Wolfer of KPMG Law.
KPMG's 2025 Federal Budget Study was conducted from September 11 to October 2. It asked Canadian business owners and executives across all industries about their priorities ahead of the November 4 federal budget.
