More than two-thirds of Canadian businesses say they can survive a trade war with the United States that lasts longer than one year, according to a new survey of business owners.
While 67 percent of the business leaders surveyed by KPMG said they could withstand a 12-month trade conflict, 30 percent said they would also face “significant profit losses” if the tariff war lasted longer than that and 3 percent said their companies would go out of business in this scenario.
Conducted last week, the survey gauged the opinions of 602 business leaders from mid-sized and large companies across Canada and industry sectors. Around half run companies in two industries expected to be hardest hit by U.S. tariffs: industrial manufacturing, and energy and natural resources.
America’s 25 percent tariffs on Canadian exports and 10 percent tariffs on energy exports officially kicked in on March 4. At the same time, Ottawa responded with reciprocal tariffs on $155 billion worth of American goods, with $30 billion coming into force immediately and the other $125 billion starting in 21 days.
A total of 86 percent of businesses surveyed by KPMG said they support retaliatory tariffs against the United States. This includes 89 percent of businesses in Ontario, 85 percent in Quebec, 83 percent in Alberta, and 80 percent in British Columbia.
KPMG Canadian Managing Partner Timothy Prince said the economic uncertainty caused by tariffs is leading 76 percent of businesses to conduct a strategic review of their operations.
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“The business community remains unwavering in its commitment to stand up for Canada,” Prince said in a press release. “The size of the tariffs and the length of time tariffs remain in place will impact their ability to weather the coming storm.”
Some companies have already taken measures to get ready for tariffs, the survey found. Fifty percent of business leaders said they have reduced their production or laid off employees in response to the tariffs, while 28 percent said they will be forced to do so if the trade war lasts for four to six months.
A considerable level of anxiety pervades the business sector, with 96 percent of respondents saying they are concerned with how the tariffs are paid and how to get goods across the border. Ninety-eight percent expressed concern about managing pricing strategies with customers, while 95 percent reported anxiety related to both upstream and downstream risks affecting their supply chains.
Prince said business owners are seeking decisive measures from both federal and provincial governments in reaction to the tariffs.
“While they will do what they must to ride this out, they expect governments to take bold action to eliminate interprovincial barriers, build a national energy-agnostic corridor, reduce red tape, and revamp the tax system to improve their ability to compete,” Prince said.
A total of 86 percent said the country should diversify its export markets and build more pipeline infrastructure to reduce Canadian reliance on the United States, while 88 percent said interprovincial trade barriers should be taken down.
Nearly one-third of respondents said they could redirect from 11 percent to 25 percent of their sales to markets in Canada.
