Nearly 40 per cent of Canadian businesses believe they are ready to implement changes quickly if the Canada-United States-Mexico Agreement (CUSMA) deteriorates, while 30 per cent say they need only minimal planning, according to a recent survey by Purolator Inc. The trade pact is up for review as of July 1, and U.S. President Donald Trump has signalled tough negotiations, even teasing termination of the agreement altogether.
Trade Uncertainty Paralyzes Business Planning
Many Canadian businesses report being in limbo while waiting for clarity on CUSMA's future. Trump said at the G7 summit last week, "I'm thinking about maybe we won't be able to make a deal. I would rather not have the CUSMA. The primary reason I wanted it was because there was no way out of NAFTA, which was the worst trade agreement ever made." Canada and Mexico are pushing for a six-year extension of the agreement to 2042 from 2036, though Prime Minister Mark Carney has acknowledged it's "no secret" Trump dislikes the deal.
Businesses Already Hit by Tariffs
Canadian businesses are no strangers to tariffs, which have been a signature policy of Trump's second term. The Purolator survey found that tariffs have cut business revenues by about 23 per cent, or an average of $661,000. More than 90 per cent of businesses have made at least one operational change over the past 18 months due to tariffs, most commonly reducing exposure to the U.S. and building flexibility into supply chains.
Proactive Companies Better Positioned
The Purolator report noted, "The companies best-positioned for what comes next share a common trait: They didn't wait for certainty before acting. They diversified suppliers, built secondary manufacturing relationships, invested in CUSMA compliance infrastructure and established contingency plans before they needed them. The opportunity to join that group is still open, but it's narrowing."
Uncertainty Worse Than Tariffs
Businesses consistently said the uncertainty surrounding international trade is worse than the tariffs themselves. The report stated, "A tariff is a cost. It can be modelled, absorbed, passed through or built into a contract. Uncertainty is different. It paralyzes planning, delays investment and forces businesses into reactivity. Rather than preparing for what comes next, they must focus on responding to what just happened."
Retail Sector Sees Modest Uptick
High gas prices helped Canada's retail sector report a 0.5 per cent increase in activity in April, though economists warn the increase does not mean strong consumption. Sales at gas stations rose 5.1 per cent in the month, while sales at motor vehicle and parts dealers climbed 1.7 per cent.
