CPAs offer their best advice on how to brace for U.S. tariffs
CPA Canada
Navigating the uncertainty of trade moves made by the Trump administration
As Canadian businesses brace for potential 25 per cent tariffs on most Canadian exports to the U.S., the looming threat has CPAs rapidly assessing financial impacts and developing contingency plans for their organizations.
In this Q&A, Claire Shawcross, CPA and founding partner at SM Accounting Group in Surrey, B.C., Dan Nordqvist, CPA, partner at Padgett Business Services in Halifax and Thomas Blonde, CPA and partner at Baker Tilly GWD LLP in Elora, Ont., share their perspectives and offer insights into how they're helping their clients prepare for more turbulent times ahead.
How has the threat of trade tariffs affected your clients’ financial planning and budgeting?
Claire: Some plans have been stalled and some were accelerated. Clients who do ship and sell in the U.S. ramped up production to move product across the border ahead of possible tariffs. As they said they were fortunate they had financial ability to do that but felt bad for those who couldn’t. Other clients have halted operational plans in the U.S. pending the end game.
Dan: Some of our restaurant clients are concerned about the rising cost of ingredients sourced from the U.S., particularly how it will impact their menu prices—such as the cost of making a pizza. In response, many are exploring local suppliers. While sourcing vegetables locally is feasible in the summer, winter presents a challenge. Are there enough local suppliers, and will costs be higher? Many restaurant owners are now questioning whether they can stay open. The uncertainty is unsettling not just for small businesses but for the entire market.
Thomas: There is a lot of anxiety in the farm community about this. When I'm talking to clients about what they should do, one strategy is, if you were storing grain for example, this might be an incentive to sell it now versus later. And then on the purchase side, we don't know what's going to happen, and, if Canada follows suit with their own tariffs, then that's going to really affect the decision-making process. If you're a farmer and you want to buy equipment or building materials from the United States, then that might delay or accelerate your decision to purchase that equipment.
What specific procurement strategies, or strategic shifts, are you recommending to help businesses adapt to increased Canadian sourcing requirements?
Claire: Right now, we are focusing on ensuring our clients are aware of the possibilities and [potential] impact so they can make decisions. This includes clients who import goods (so the Canadian tariffs on importing will impact them). For some, this may not be an option to resource locally and therefore they will need to re-price for consumer sale.
Dan: Businesses are prioritizing local sourcing or exploring alternatives outside the U.S.. Even with the recent pause in policy changes, many remain cautious—unsure if the pause is temporary or if restrictions will return. Service industry clients with U.S.-based customers are also feeling the impact. Some American clients are hesitant, unsure whether to continue their Canadian contracts or hold off, which creates financial strain for businesses reliant on U.S. revenue. To mitigate risk, we encourage diversification and a stronger focus on Canadian partnerships.
Thomas: Buy local and get ahead of it. If you had something on order and you were going to have it delivered three or four months from now, what could you do to accelerate that? Alternatively, buy from a different country. This might make it more appealing to buy a Fendt tractor that's made in Germany versus a John Deere tractor made in the United States. We can more easily purchase certain things, particularly in agriculture, from other countries instead of the United States. It’s tricky because our commodities trade on the world market and it's a lot more expensive to ship grains, for example, over to Saudi Arabia than it is to the United States. But, it would make us look at those markets a little bit more closely than we did in the past.
Can you share an example of how tariffs have changed your clients’ supply chain approach?
Claire: We had clients ramp up moving final products over the border ahead of any tariff. By getting it over the border before tariffs, they’re able to avoid them. However, they now have stockpiled products which take up more warehouse space plus the [added cost] to do this.
Dan: Local businesses are actively seeking ways to support the local economy and explore alternatives. Many are now also considering local suppliers for pricing stability. Passing rising costs onto consumers is challenging. One pizza shop, for instance, recently partnered with a supplier and ordered equipment from the U.S., only to face unexpected taxes that could add thousands to their costs. As a result, their plans to open a new facility are now on hold. Given that the shop is in a seasonal area of Nova Scotia, any delay could impact its ability to open in time for peak business. If costs continue to rise, they may require additional financing or need to switch vendors, further extending delays.
Thomas: In Canada, the dairy and poultry industries are protected under the supply management system where the government restricts imports and at the same time sets a specific price that dairy and poultry farmers get for the sale of their products. There's some thought that this'll be a pressure tactic to water down or eliminate the supply management system. If that were to happen, it would have a very devastating effect. So, this is a real concern for us, and it's something that I've heard a lot from our clients.
What financial analysis techniques are you using to assess the cost implications of shifting from international to Canadian suppliers?
Claire: Accountants who are working internally will be looking at cost analysis. As an external tax accountant, we will not see the full ramifications until year ends and possibly not even then as some of these costs will be buried in inventory costs until sold.
Dan: I always encourage businesses to conduct scenario analysis when facing any potential market change, including tariffs. This involves assessing both best- and worst-case scenarios: If tariffs apply, what is the financial impact? If they don’t, how does that change the outlook? If tariffs make U.S. imports expensive, would switching to local suppliers be more cost effective? A scenario or sensitivity analysis helps businesses determine if their plans remain viable. By modeling these outcomes, they gain a clearer roadmap for decision-making, ensuring they base choices on data rather than uncertainty.
Thomas: We look at costs and do sensitivity analyses. Say you're a grain or oil seed farmer and you're subject to the commodity market, there are various tools that you can use to help protect you from that commodity market risk. You can use these tools like hedging contracts, forward contracts, or basis contracts. If you're able to lock in a profit at that certain amount, then use these tools to lock that in and protect yourself.
What advice or practical tips would you give to other CPAs in fields or industries that have been significantly affected by the tariffs?
Claire: For any CPA working with their clients, you need to be part of the team putting together a “war plan” to look at how or if tariffs will impact on input goods (or export), [whether] pre-buying and stocking is doable if the extra costs can be justified; will price points absorb the transfer of these costs, and how unique is your product and can it be replaced with a local version (for US market sellers). Or can you source from Canada to replace your US supplier.
Dan: Stay in close communication with your clients. Many business owners are understandably concerned but may not think to consult their accountant for strategies to manage these uncertainties. Work together to explore ways to mitigate risks or at least understand the potential impact. While planning for the unknown is challenging, conducting a worst-case scenario analysis—similar to disaster planning—can help businesses prepare.
Thomas: It's a little bit frustrating for CPAs because we deal with certainty. If we knew that there was going to be a 25 per cent tariff and this is going to be the reality for the next three years, then we could provide some value-added advice here. Don't worry if you're finding it difficult to give your clients advice about this kind of stuff, because I think all of us are in the same position.
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