The ongoing U.S. tariffs situation is widely covered in economic and political headlines, but one of its less-discussed casualties is the human resources (HR) department.

Although HR teams are not directly involved in trade negotiations or tariff enforcement, the consequences of tariff changes are creating an unexpected wave of challenges, from workforce disruptions to morale issues and talent management headaches.

It’s a situation, says Brad Ratz, Director of Growth Strategy and Customer Experience at H2R Business Solutions, has not gone unnoticed by companies like his that provide support to small and mid-sized businesses.

“It definitely shifts you from a proactive stance to a reactive stance as an organization,” says Brad, referring to the ongoing impact of tariffs and how businesses have had to adapt. “But I think in the last few weeks there has been some more stability.”

Tariffs, essentially taxes on imported goods, often lead to higher costs for raw materials, components, and finished products. For industries like manufacturing, automotive, electronics, agriculture, and retail, this has created enormous financial pressure. While executives and supply chain managers scramble to adjust pricing, sourcing, and operations, HR departments are left to manage the human side of the fallout.

Companies facing shrinking profit margins often respond with hiring freezes, layoffs, or restructuring. This leaves HR teams tasked with managing reductions in force, handling severance, conducting difficult conversations, and navigating legal risks—all while maintaining morale among the remaining workforce.

Assessment key for businesses

However, Brad says on the other end of the ‘doom and gloom’ side of the situation there has been an uptake in hiring as many companies capitalize on the ‘buy Canadian’ movement.

“As many companies are being impacted and may be modeling out some worst-case scenarios, we've got on the other side clients that say, ‘How do we even keep up with the amount of work that's being directed to us right now?’” says Brad, adding organizations must really start to think strategically when it comes to planning. “How do we navigate this uptick? Because the question then is how long is this sustainable?”

For companies forced to shift their strategies—such as relocating manufacturing out of tariff-affected countries—HR faces the complex task of redeploying talent. This might involve reskilling workers for new roles, managing transfers, or negotiating with unions. Retraining programs, once seen as long-term development initiatives, have become urgent necessities to keep pace with rapidly changing business needs.

Assessment, says Brad, is key when companies are faced with rapid changes.

“Take that pause and ask some questions and assess the landscape and what's happening. Once you've assessed, then it's time to start planning. What's best case scenario and what's worst case scenario?” he says. “I love the assessment piece because you’re acting off of real data and you're kind of eliminating some of that emotional stuff that's going to come in if you don't stop and do the assessment.”

Managers require support

Another hidden cost of the tariffs situation is employee anxiety. News of supply chain disruptions, rising costs, or customer losses spreads quickly through the workforce. Employees fear for their jobs, speculate about layoffs, and worry about the company’s future. Even if no cuts are made, morale can take a hit, leading to drops in productivity and engagement.

HR teams must invest time in internal communication to reassure employees, manage rumours, and maintain trust. They also need to support managers in having transparent conversations with their teams. In some cases, HR may introduce stress management programs or offer additional mental health resources to help employees cope.

“We've had a significant increase from a training and development side trying to equip leaders to help navigate the changes that are coming through this and support their teams,” says Brad, adding some smaller organizations may already have tools in place to assist. “If you do feel like your team is going to be affected in many different ways, what systems or tools do you already have access and available that can support our staff through this?”

Moving forward, companies need to recognize HR’s critical role in times of economic disruption. This means ensuring that HR leaders have a seat at the table during strategic planning, providing resources for employee support programs, and investing in workforce planning and training. Without this, the toll on morale, retention, and performance may far outlast the tariff wars themselves.

Speaking on a personal note, Brad says despite any shifts caused by tariffs, he is optimistic for the what the economic future holds.

“Canada is one of the largest economies in the world. On a global scale, we’re not small and there's lots of opportunity out there,” he says. “Typically, after any time of crisis, and I would classify this as crisis, that's usually when the largest level of innovation happens.”

Challenges faced by HR departments include:

Job security and layoffs

Tariffs can lead to declining demand in certain industries, potentially causing layoffs and hiring freezes. HR must develop strategies for managing workforce reductions while maintaining employee morale.

Reskilling and upskilling

As businesses adapt to changing market conditions, including tariff-related shifts in supply chains, HR may need to focus on reskilling employees for new roles.

Employee morale

The uncertainty surrounding tariff policies and their potential impact on jobs and the economy can negatively affect employee morale, leading to decreased productivity and engagement.

Compensation and benefits

Rising material costs due to tariffs can put pressure on company budgets, potentially requiring HR to adjust compensation structures and benefits packages to remain competitive.

Transparency and communication

HR leaders need to be transparent with employees about how tariffs may impact the business and provide support programs to help them navigate the changes.

Impact on healthcare costs

Tariffs could also lead to rising pharmaceutical costs, adding to the challenges already faced by HR in managing healthcare inflation, according to Businessolver.

The political landscape of the United States has always had ripple effects beyond its borders, particularly in Canada. The two countries share not only economic ties but also social, cultural, and psychological interconnections. 

In recent years, particularly during Donald Trump’s first, and now second presidency, Canadians have reported increased levels of stress and anxiety related to the political climate south of the border. From threats of tariffs to talk of annexation and aggressive foreign policies, these developments are more than just headlines—they’re mental health triggers.

“Unfortunately, right now in particular, our world is very unsettled,” says Helen Fishburn, CEO of the Canadian Mental Health Association, Waterloo Wellington Branch. “We’re feeling it in every part of our lives and the ground we're walking on is literally changing day by day.”

Throughout the pandemic, she says the CMHA experienced a 40% increase in call volumes pertaining to mental health issues which have not returned to pre-pandemic levels creating a ‘new normal’ level, which has only been exacerbated by Trump’s talk of tariffs and annexation.

Beyond the economic implications, there is a psychological toll in witnessing long-standing alliances become strained. Canadians often view the U.S. as not only a close neighbour but also a partner in shared democratic and cultural values. When that relationship feels uncertain—especially when threatened by economic aggression or nationalist rhetoric—it can lead to a sense of instability, helplessness, and even identity confusion for some.

People feeling anxious

“We’ve seen another uptick in calls and concerns, but that's not unusual for us when the world is unsettled and things are happening in our community that people feel very anxious and worried about,” says Helen. “It’s a tough world that we're navigating right now.”

She says it’s important for people to take responsibility for their own mental health, which can be difficult when it comes to navigating negative posts on social media.

Paying attention to yourself is key she says.

“Ask yourself, ‘What are the things that I'm doing to cope right now?’, especially if you're in one of those sectors that's really impacted by tariffs like the automotive industry, food, construction, agriculture, forest and mining,” says Helen. “We have to be a little more vigilant about our mental health.”

First and foremost, she says we have a responsibility to try and manage the stress that we're experiencing in our lives in a way that's healthy and productive.

“But there are times that we lose our ground, and we just don't always catch it,” she says.  “However, you can see it sometimes in other people sooner than you can see it in yourself.”

In workplaces, she says it’s important for employers to recognize when an employee may be struggling, looking for various signs such as sudden absenteeism, significant tiredness, or introverted behaviour from someone who has always been more extroverted. She notes that approximately $51 billion annually in Canada is lost due to mental health issues in the workplace.

Connection good for mental health

“First of all, the most important thing is to actually name it and talk about the stress we're under,” says Helen. “Talk about the impact of all the things that are happening in the world, most of which we don't have any control over, and really identify that and create opportunities for employees to talk about it.”

She says setting healthy boundaries is important, ensuring employees can disconnect from their workplace and encouraging them to access EAPs (Employee Assistance Programs), or provide pamphlets and information through email that can benefit them. 

“Continue to regularly encourage people to connect as they need to, and then have managers check in with their staff in a very kind of informal, non-judgmental way,” says Helen, adding employees must also not be made to feel they are being monitored. “But it can go a long way when your manager just says, ‘How are you doing with all this? How are you managing? Is there anything you need?’”

At the CMHA, which has approximately 450 staff members working across nine offices, staff meet several times a year, plus an online forum is used where employees are encouraged to ask questions. 

Supports are available

“You need to find multiple ways to keep your employees engaged because those are the kind of things that keep people feeling connected and grounded,” says Helen, adding how important this can be considering hybrid workplaces. 

For those workplaces that require mental health supports, she says the CMHA has many resources available, including its ‘Here 24 Seven’ service where people can access assistance for themselves or a family member via a toll-free number (1-844-Here-247), or by visiting www.here247.ca.

“Just call us and we'll help you figure out. We're always available to help people and make sure that they get to where they need to get to it,” says Helen, noting the economic impact mental health has on businesses can’t be ignored.  “We continue to be very underfunded across the mental health sector as it relates to healthcare in general. We're struggling to meet the needs that's out there and know the need just continues to rise and be even more intense.”

Methods business leaders can support the mental health of their teams:

Foster an Open and Supportive Culture

By normalizing conversations and showing vulnerability—such as discussing stress or burnout—they help reduce the stigma. Encouraging open dialogue, offering empathy, and actively listening to employee concerns create a safe space where people feel comfortable seeking help.

Provide Access to Mental Health Resources

Organizations should invest in resources that support mental well-being, such as Employee Assistance Programs (EAPs), therapy services, wellness apps, and mental health days. Leaders should ensure employees are aware of these benefits and encourage their use without fear of judgment or career repercussions.

Promote Work-Life Balance

Leaders can model healthy work habits by setting clear boundaries, taking time off, and respecting employees’ personal time. Flexible work schedules and remote options also help employees manage stress and balance responsibilities.

Train Managers to Recognize Signs of Distress

Managers are often the first to notice changes in behaviour or performance. Providing them with mental health training helps them recognize warning signs and approach sensitive conversations with care. Empowered managers can guide team members to appropriate resources and support early intervention.

Create a Culture of Recognition and Purpose

Leaders should regularly acknowledge employee contributions, celebrate successes, and clearly communicate how individual roles support organizational goals. A sense of purpose can be a powerful buffer against stress.

Encourage Breaks and Downtime

Leaders should encourage regular breaks, manageable workloads, and discourage a “grind” culture. Even small gestures, like encouraging walking meetings or designated no-meeting hours, can make a difference.

Lead by Example

When leaders openly prioritize their own mental health—taking time off, using wellness benefits, practicing mindfulness—they give employees permission to do the same. Authentic leadership builds trust and encourages a healthier workplace dynamic.

Continuously Evaluate and Improve

Supporting mental health is an ongoing effort. Leaders should regularly gather feedback through surveys or listening sessions and adjust policies and practices accordingly. What works for one team may not work for another, so flexibility and responsiveness are key.

Canadian businesses are grappling with significant challenges stemming from U.S. President Donald Trump's imposition of tariffs.

These measures have introduced economic uncertainty, disrupted supply chains, and strained the historically robust trade relationship between Canada and the United States.

That uncertainty has been compared to what many businesses felt when the pandemic virtually shut down the economy, creating chaos and confusion.

To assist the local business community as they did then, the Cambridge Chamber of Commerce and Greater Kitchener Waterloo Chamber of Commerce have relaunched their Ask the Expert initiative to share information and resources.

Held online every Thursday from 9 a.m. to 10 a.m., Ask the Expert provides business operators the opportunity to discuss their concerns, as well as hear the latest news and insights from a variety of professionals surrounding the issues related to this escalating trade war, including federal aid programs.

Global growth slowdown

Among those who recently shared their knowledge was Automotive Parts Manufacturers’ Association (APMA) CEO Flavio Volpe who discussed, among other things, the impact tariffs will have on auto industry on both sides of the border. 

“It almost feels a little bit like we are in the early days of the pandemic when business owners we’re just trying to understand what was happening,” says Cambridge Chamber President and CEO Greg Durocher, describing the uncertainty currently being felt by business owners.

The Organization for Economic Co-operation and Development (OECD) has highlighted the detrimental impact of these tariffs on the global economy, with particular emphasis on Canada.

The OECD forecasts a slowdown in global growth to 3.1% in 2025 and 3.0% in 2026, attributing this deceleration partly to the trade tensions initiated by the U.S. Specifically, Canada's economic growth is projected to decline to 0.7% in 2025, a significant reduction that underscores the profound effect of the tariffs on the nation's economic trajectory.

Eroded business confidence

The unpredictability associated with the on-again, off-again nature of the tariffs has eroded business confidence.

The latest CEO Confidence Index from Chief Executive magazine indicates a significant drop, reaching the lowest level since November 2012. This decline is attributed to the fluctuating tariff policies between the U.S., Canada, and Mexico, which have made long-term planning and investment decisions increasingly challenging for businesses.

Executives from major financial institutions have voiced concerns about the negative impact of this uncertainty on business operations and economic stability. 

Greg says that uncertainty is clear, noting many of those logging on to Ask the Expert are smaller business owners who may not be directly impacted by tariffs but more from the trickle-down effects of a prolonged trade war.

“Nobody really knows yet what those impacts will be,” he says. “The people joining us really want to know more about timing and when things are going to happen. I think some of the concerns are morphing away from talk of annexation and are now touching on the realization that there is something really wrong in the U.S.”

To join an Ask the Expert conversation, visit www.chambercheck.ca (which offers resources and information to help businesses) and sign up. 

For those who can’t participate live, Ask the Expert videos are posted on  www.chambercheck.ca  and the Cambridge Chamber of Commerce YouTube channel. 

Federal aid package info

In response to U.S. tariff impositions that have disrupted trade and heightened economic uncertainty, the Canadian government has introduced a comprehensive aid package exceeding $6 billion to support affected businesses. The key components of this financial assistance include:

1. Trade Impact Program by Export Development Canada (EDC):

With its newly launched Trade Impact Program, EDC is prepared to facilitate an additional $5 billion over two years in support. This program aims to:

• Market Diversification: Assist exporters in identifying and penetrating new international markets, reducing reliance on the U.S. market.

• Risk Mitigation: Provide solutions to manage challenges such as non-payment risks, currency fluctuations, and cash flow constraints.

• Expansion Support: Offer financial backing to overcome barriers hindering business growth and international expansion.

These measures are designed to help companies navigate the economic challenges posed by the tariffs and adapt to the evolving trade environment. 

Government of Canada.

2. Business Development Bank of Canada (BDC) Financing:

To support businesses directly affected by the tariffs, the BDC is providing $500 million in favorably priced loans. Key features include:

• Loan Amounts: Businesses can access loans ranging from $100,000 to $2 million.

• Flexible Terms: Loans come with favorable interest rates and flexible repayment options, including the possibility of deferring principal payments for up to 12 months.

• Advisory Services: Beyond financing, BDC offers advisory services in areas such as financial management and market diversification to strengthen business resilience.

This initiative aims to provide immediate financial relief and support long-term strategic planning for affected businesses. 

3. Farm Credit Canada (FCC) Support for Agriculture and Food Industry:

Recognizing the unique challenges faced by the agriculture and food sectors, the government has allocated $1 billion in new financing through FCC. This support includes:

• Additional Credit Lines: Access to an additional credit line of up to $500,000 for eligible businesses.

• New Term Loans: Provision of new term loans to address specific financial needs arising from the tariffs.

• Payment Deferrals: Current FCC customers have the option to defer principal payments on existing loans for up to 12 months.

These measures are intended to alleviate cash flow challenges, allowing businesses to adjust to the new operating environment and continue supplying high-quality agricultural and food products. 

4. Enhancements to the Employment Insurance (EI) Work-Sharing Program:

To mitigate layoffs and retain skilled workers, the government has introduced temporary flexibilities to the EI Work-Sharing Program:

• Extended Duration: The maximum duration of work-sharing agreements has been extended from 38 weeks to 76 weeks.

• Increased Access: Adjustments have been made to make the program more accessible to businesses experiencing a downturn due to the tariffs.

This program allows employees to work reduced hours while receiving EI benefits, helping employers retain experienced staff and enabling workers to maintain their employment and skills during periods of reduced business activity. 

5. Strengthening Investment Protections:

To safeguard Canadian businesses from potentially harmful foreign takeovers during this period of economic vulnerability, the government has updated the Investment Canada Act Guidelines. While Canada continues to welcome foreign investment, these updates ensure that any investments posing risks to economic security can be thoroughly reviewed and addressed.

Click here to learn more.

The impact of U.S. President Donald Trump’s 25% tariffs on Canadian imports and Canada’s counter tariffs has significant implications for various sectors of our economy, including tourism, with Ontario poised to experience both direct and indirect effects on this industry.

The Canada-U.S. border has traditionally seen substantial movement of tourists in both directions. However, these escalating trade tensions have led to a surge in nationalistic sentiments, influencing travel decisions.  Reports have indicated that many Canadians plan to boycott travel to the U.S. in response to Trump’s tariffs, opting instead for domestic destinations or alternative international locations, a trend that has not gone unnoticed by tourism experts. 

“We're hearing that 40% of Canadians that had booked a trip to the U.S. have cancelled their plans,” says Explore Waterloo Region CEO Michele Saran, noting travel destinations nationwide are expecting an uptick in tourists this summer. “If I was a Canadian destination that actively pursued the U.S. market, right now I would be pushing the exchange rate really hard.”

Potential side-effects

However, economic downturns typically result in reduced disposable income, which can lead to a decline in domestic tourism as residents may cut back on travel and leisure activities.

Moreover, the weakening of the Canadian dollar is likely to make international travel more expensive for Canadians, potentially reducing outbound tourism. But on the flipside, a weaker Canadian dollar could make Canada a more attractive destination for foreign tourists, as their currencies would have greater purchasing power. 

There are also potential side-effects surrounding the impact heightened political tensions and changes in consumer sentiment that have been created.

“I have been told that Americans are expressing concern about how they'll be treated if they come to Canada right now,” says Michele. “So, they're a little bit reticent about it right now. But from a leisure travel perspective, Waterloo Region has always focused on marketing in Southern Ontario.”

In fact, she says the travel organization is in the process of creating and promoting new packages to encourage visitors to spend more time here once they arrive.

Specific marketing

“We want to provide them with options they can’t find in downtown Toronto,” she says of this new promotional tactic. “We're giving them an itinerary so that they'll be able to create a mental movie of a staycation in Waterloo Region and how they could spend their time here.”

Michele says Explore Waterloo Region is conducting specific marketing targeted at couples, families and groups of friends highlighting the authentic ‘experiences’ that cities located on the edge of nature can offer. 

“We're testing them right now at the target market to make sure we mitigate any risk to make sure that these markets find them compelling,” she says, noting Waterloo Region’s proximity to the GTA will likely prove to be an even bigger advantage this year.  “About 90% of our leisure visitors come from that area. It’s easy to get here and we also have we have both rural and urban, so there's something for everyone when you come to the region.”

Annually, Waterloo Region attracts approximately five million visitors not just for leisure visits, but conferences, meetings, and sporting events, which translates into nearly $560 million for the local economy. 

To learn more, visit Explore Waterloo Region.

Tourism stats:

• Canada is the biggest source of international visitors to the U.S. accounting for for 20.4 million visits in 2024, generating $20.5 billion in spending and supporting 140,000 American jobs. 
• According to the U.S. Travel Association, even 10% less Canadian tourists to the U.S. could mean 14,000 job losses in related industries in that sector and two million less visitors.
• Florida, California, Nevada, New York, and Texas are the top states Canadians visit. Since shopping is a popular activity for Canadian visitors, these states could see steep declines in retail and hospitality revenue.
• Ontario’s Highlands Tourism Organization (OHTO) recently revealed that visitors are increasingly seeking meaningful experiences that allow them to reconnect with friends, family, and nature. This trend is reflected in a noticeable shift in spending patterns; between January and September 2024, visitor spending reached $399 million, marking a 12% increase over the previous year.
• In January 2025, more than $1.4 million was allocated to 10 organizations across southern Ontario federal government. Notable projects include the creation of a looped trail connecting Burlington to the Niagara Escarpment trail network and the Bruce Trail, aimed at augmenting active outdoor visitor experiences. Additionally, enhancements to were announced for the Hydrocut mountain bike trails in the Waterloo Region.

The high cost of living, inflation, housing affordability, and rising operational costs top the lists of concerns for Ontario businesses, according to the Ontario Chamber of Commerce’s (OCC) most recent Ontario Economic Report (OER). 

The report shows a significant rise in business confidence over the course of 2024, climbing from a historic low of 13% to 26% by year’s end. Despite this improvement, confidence remains historically low and fragile, with 48% of businesses expressing a lack of confidence in the economy. Affordability and the cost of living continue to be the most pressing concerns for businesses.

The survey, conducted between October 15 and December 2, 2024, gathered insights from 1,714 respondents representing a diverse range of industries, regions, and organizations.

The results show that when U.S. tariff threats are on the table, business confidence drops dramatically to just 15%, almost erasing the last year’s gains, according to the OCC’s separate tariff survey in early February. This recent research also shows that with tariffs in play, six in ten (60%) business decision makers would lack confidence in Ontario’s economic outlook.

“I may not use the word fragile describing the confidence level and instead use the word tempered,” says Cambridge Chamber of Commerce President and CEO Greg Durocher. “People's optimism for the future of business in the short term is tempered by the impact of Trump’s tariffs. I think most people in business realize that the impact of any decision is probably going to be short term. Whether or not tariffs are long term isn't the issue, it’s the impact of tariffs. So, after a period time, the marketplace settles down and people get used to whatever is the new reality.”

Ontario’s economic outlook varies

Confidence in Ontario’s economic outlook varies significantly across industries, with the information and cultural industries sector reporting the lowest level of optimism at just 17%.  Businesses in this sector cite high operational costs, shifting consumer behaviour, declining advertising revenues, and mounting pressures from technological disruption, global competition, and regulatory challenges as key drivers of their pessimism.

The retail (18%), non-profit (20%), utilities (21%), and accommodation and food services (22%) sectors follow closely, reflecting the impact of declining consumer spending amid heightened cost-of-living pressures.

The agriculture sector, while showing a slight improvement over last year, also remains among the least confident sectors (22%). Concerns in this sector centre on extreme weather events, trade and supply chain barriers, and growing labour gaps and succession planning challenges as a significant portion of the workforce approaches retirement.

By contrast, confidence is strongest in the mining (56%), finance and insurance (40%), and administrative and waste management services (40%) sectors. This could be explained by the strong demand for critical minerals supported by Ontario’s Critical Minerals Strategy, rising sustainability initiatives the finance sector’s ongoing resilience, and growth driven by fintech advancements. These sectors demonstrate adaptability and the ability to capitalize on emerging opportunities.

Survey respondents remain optimistic

Regionally, most of Ontario’s regions outside the GTA saw a significant reduction in confidence compared to the previous year.

Confidence is lowest in Stratford-Bruce Peninsula (19%), Northeast Ontario (21%), and the Greater Ottawa Area (21%), where in addition to concerns surrounding high costs and housing affordability, businesses are disproportionately sensitive to government policies and investments and have suffered more extreme weather events than other regions.

Confidence is highest in the Greater London Area (34%), a significant rebound from last year (9%). This resurgence is likely fueled by strong consumer demand, and domestic manufacturing capacity and supply chains, including the announcement of the Volkswagen EV battery plant in St. Thomas.

Despite the challenges, respondents report relative optimism about their own business growth prospects. Nearly half (49%) express confidence in their own future, citing factors such as strong consumer demand, innovation, and improved inflation management, something that doesn’t surprise Greg.

“I think that you'll find that there's going to be a growth and optimism because many sectors in Canada are going to strengthen as a result,” he says. “We’ve never been the ‘buy Canadian’ kind of a nation and the U.S. has always had buy American programs in place because we’ve always understood we were a player in the global market.”

He says there are initiatives created by the Provincial and Federal governments to encourage Canadian businesses to look at other, more reliable markets, rather than depending on the American market.

European Union agreement key

“Why we perceive the U.S. market to be unreliable right now is because anything that the American government does that impacts the trade with their nation is exponential in our case because 80 per cent of our GDP goes to the United States,” says Greg. “So, we're vulnerable to every whim of the U.S. government. For us to get more reliable sources, we need to diversify so we need to have relationships in the European Union.”

He notes the Canada-European Union Comprehensive Economic and Trade Agreement, which Canada signed in the fall of 2016, has been underutilized. 

“I think it stands to reason that we have not served ourselves well by not really looking seriously at the European Union for economic trade,” says Greg, noting this happened primarily because of our expectation the U.S. would always remain a reliable trading partner.

“We need to understand what the reality of this is going to be going forward and whether we do get aggressive when it comes to find other trading partners.  And if Canadians continue to buy Canadian that will really impact the U.S. exponentially because we do consume a lot of American products.”

Click here to read the report.

Report highlights: 

• Business confidence in Ontario’s economy has doubled in the past year, rising from 13% to 26%, but a majority of respondents (48%) lack confidence in the economy. 
• High costs remain the top concern for businesses, with 78% citing the cost of living, followed by inflation (62%), housing affordability (57%), and rising operational costs (51%).
• Simplifying or reducing business taxes (42%) is the most frequently cited policy solution to improve economic conditions, followed by affordable housing (32%), health system capacity (30%) and workforce development to solve labour shortages (29%).
• While businesses recognize the economic importance of technology adoption, environmental sustainability, diversity and inclusion and Indigenous reconciliation, businesses report a need for support and guidance in seizing these opportunities.
• Businesses report being ill-equipped to support workers and communities through mental health and addictions challenges. For example, while 71% of businesses recognize the importance of mental health and well-being to their success, only 41% have formal mental health strategies.
• Business leaders are confident in their ability to adapt to ongoing trade tensions between the U.S. and Canada with nearly half (48%) reporting confidence, while 32% are neutral and only 15% expressing a lack of confidence. 
• Ontario’s post-pandemic recovery faces significant headwinds, including potential U.S. tariff threats, geopolitical instability, lagging productivity, affordability challenges, and rising unemployment.

The following column by Cambridge Chamber President and CEO Greg Durocher appears in the winter edition of our INSIGHT Magazine

There’s a chance we might be panicking over nothing after Donald Trump was again elected this past fall as President of the United States, defying political norms in a way few others have.

Despite being a convicted felon—yes, by a jury of his peers, not a partisan judge—Trump secured his return to the highest office in the land, with a staggering 34 convictions under his belt. His campaign rhetoric was, as always, polarizing and often crossed the line of decency. 

Politics has clearly changed since there was a time when even a fraction of Trump's controversies would have ended a political career. Yet here we are. Some Canadians celebrated his victory, but it perplexes me why anyone north of the border would since he has demonstrated little regard for Canada, dismissing us as an afterthought despite our deep economic ties.

The truth is America’s prosperity is intrinsically linked to our resources and partnership.

Canada: An Indispensable Ally

Consider this: 60% of the crude oil the U.S. consumes comes from Canada. Saskatchewan supplies uranium, which is essential for energy production and national security, and potash essential for the agriculture industry. Quebec powers the northeastern United States with hydroelectricity. Alberta’s natural gas and Canada’s aluminum and steel exports are cornerstones of U.S. infrastructure.

But what would happen if we turned off the taps? A trade war would hurt us both, but Canada’s contribution to the U.S. economy is undeniable. Trump’s focus should be on challenges like China and Russia, not antagonizing U.S. allies.

Revisiting NAFTA and Trade Tactics

However, his threats are nothing new since we’ve seen this playbook before. In 2016, Trump declared NAFTA (North American Free Trade Agreement) dead, demanding a "fair deal." After much posturing, the agreement was merely updated—something long overdue. Trump called it a victory, and his supporters cheered him on, but the changes were only modest at best.

Similarly, his famous promise to build a wall funded by Mexico resulted in just 732 km of construction—most of which replaced existing barriers. Mexico, of course, didn’t pay a dime and some of the "new" wall even deteriorated quickly, bogged down by allegations of corruption among Trump’s staff.

The Reality of Trump’s First Term

Let’s be honest—Trump’s first term was marked by unfulfilled promises and many controversies. His pandemic response was completely disastrous, with state governors openly criticizing his lack of leadership. Who could forget his infamous suggestion to inject bleach as a COVID-19 treatment? Why would a person even suggest that? Trump signed agreements that drove up gas prices, contributing to inflation.

Running a country is vastly different from running a private business, and Trump’s approach often revealed his lack of governance expertise.

What’s Next?

His 25% tariff plan threat on Canadian goods are likely bluster—an opening gambit to pressure Canada and Mexico into renegotiating trade agreements. It really is a strategy very reminiscent of his NAFTA theatrics.

In the end, we’ll likely see a slightly revised deal that Trump will tout as another one of his "wins." Of course, his base will applaud, despite little substantial change.

Canada’s Challenge

For Canadians, Trump’s presidency is very concerning since his leadership style— always chaotic and self-serving—offers no real benefit to Canada. Therefore, we must brace ourselves for uncertainty and prepare to protect our interests.

Meanwhile, south of the border, Americans will face the consequences of his polarizing and often ineffective leadership.

In the end, Trump’s bravado may have won temporary support from his base, but we must remember it’s critical to separate rhetoric from results. As the old saying goes, “Be careful what you wish for—you just might get it.”

Never in the history of trade negotiations have we seen a country’s largest, most important business  association openly call its government’s trade proposals “dangerous” and say they should be withdrawn. That is exactly what the U.S. Chamber of  Commerce did yesterday.

Canada’s negotiators have done their very best in a challenging environment. They have reached out to Canadian people and business, they have extended a warm hand of friendship to their U.S. and Mexican counterparts and they have tabled sensible, generous proposals to improve NAFTA. But, we all have to prepare for the possibility that the U.S. will withdraw from NAFTA, based on the poisonous proposals U.S. negotiators have presented.

The craziest is a sunset clause that would terminate NAFTA after five years unless all three parties agree it should continue. Imagine the uncertainty of having all three countries debate the merits of trade every five years. How could anyone plan to build a factory with a useful life of 30 years? NAFTA would cease to exist for the purposes of long-term business investment.

The second troubling proposal concerns the rules of origin. Currently, 62.5% of a car or a truck must be produced in the U.S., Mexico or Canada for it to qualify for duty-free treatment under NAFTA. The U.S.’s proposal would require that 50% of the vehicle be produced in the U.S. This would be immensely harmful to the North American auto industry. It’s impossible to replace long-established multi-billion- dollar supply chains so most companies would simply pay the generally low U.S. tariffs. Manufacturers would then source more inputs from Asia.

The third concern is the administration’s proposal to eliminate Chapter 19, the process for dispute  settlement for anti-dumping and countervailing duties.
 
This comes at a time where the U.S. wants to impose a ludicrous 300% tariff on Bombardier jets, which is above even what Boeing had asked for. Chapter 19 is a critical safety net because it enables an independent, binational panel of five arbiters, agreed by both parties, to determine whether or not the duties have merit based on U.S. domestic laws. This is a must-have for Canada.

The final jaw-dropping proposal would drastically reshape NAFTA’s procurement rules. U.S. negotiators are proposing a “dollar for dollar” approach to North American procurement markets. That would mean “the total value of contracts the Canadians and Mexicans could access, together, couldn’t exceed the total value that U.S. firms could win in those two countries.” This is quite simply the worst offer ever featured in a trade agreement and is worse than basic access to government procurement offered under the WTO. Canada would be better off with no agreement at all than signing on to this nutty nonsense.

At the Canadian Chamber of Commerce, we salute the government’s efforts on NAFTA. The government has done everything possible: our negotiators have been outstanding, Minister Freeland and the entire Cabinet have invested enormous time in building relationships in the U.S., and the PM has invested his political capital and considerable charm to go to bat for NAFTA.

ut, if the U.S. administration is not serious about negotiating a mutually beneficial agreement, then we believe no deal is preferable to a bad deal. This is because a trade agreement will last many years. The Trump administration, we’re not so sure…

For more information, please contact:

Hendrik Brakel

Senior Director, Economic, Financial & Tax Policy

613.238.4000 (284) 

[email protected]

Guest Column by Perrin Beatty, President & CEO, The Canadian Chamber of Commerce

Want to understand the reality of trade in North America? Start at the FedEx Super Hub in Memphis, Tennessee at 1:00 a.m., watching the incredible flood of 3.3 million packages daily, ripping with machine-like efficiency over 300,000 conveyor belts spread out over 862 acres.

Our delegation’s four days in Tennessee were designed to provide an opportunity to make the case for Canada. The southern reputation for hospitality is well-deserved in Tennessee. And it seemed like everyone has a connection to Canada. I discovered that the Mayor of Nashville, Megan Barry, once worked for Nortel, that FedEx’s 4,000 pilots train on Canadianmade flight simulators and that Memphis residents can enjoy poutine and Canadian beer at the area’s two Kooky Canuck restaurants.

And who says Americans don’t know much about Canada? I met dozens of people who appreciate the importance of Canadian businesses, often because of large Canadian investments. We visited CN’s massive intermodal hub, located slightly outside of Memphis. This hub is CN’s gateway to the south, where it can switch containers from one mode of transportation to the other easily. These connections helped us spread the word about the benefits of doing business with Canada.

Most folks weren’t aware that Canada was their biggest trade partner, but they were happy to hear it. Currently, there is nearly $14 billion of trade between Tennessee and Canada (that’s more than our trade with France and Italy combined), and over 170,000 jobs in Tennessee depend on trade with Canada. The numbers are astonishing, and when I met Matt Wiltshire, Director of Nashville’s Economic and Community Development Office, he enthusiastically offered to help spread the word.

We had very positive discussions about NAFTA. When we met the Memphis Chamber, the participants rallied around the idea of “do no harm.” We agreed that although NAFTA can and should be modernized, the current structure should be the starting point, without having to reinvent the agreement. Overall, the Americans we met believed the NAFTA renegotiation will go well. That’s why this work is so important.

Last week the U.S. Trade Representative released its objectives for renegotiating NAFTA. There are areas of concern for us, but it emphasizes building upon the current NAFTA relationship. However, we worry the scope of the negotiations is extraordinarily ambitious—everything from dispute resolution to rules of origin, services, intellectual property. A major rethink could take years.

In Washington, politicians will be under pressure to talk tough and tweet crazy things. The negotiators will set “red lines,” deadlines and “deal breakers.” Things can get hot. I remember the Cabinet meeting when Brian Mulroney ordered our negotiators to walk away from the Canada-U.S. talks. But behind the rhetoric and theatre, Tennesseans reassured us that real business people are still sensible, cooperative and ambitious.

Whether it’s a fight over NAFTA or any other friction between our countries, it is so important that we have business allies who will stand with us to say that Canada is a friend, an ally and a partner.

Our next stop is Texas and then on to Georgia. If you’d like to participate in any of our delegations, please email us. If you’re looking for more info, click here.

For more information, please contact:

Hendrik Brakel

Senior Director, Economic, Financial & Tax Policy

 613.238.4000 (284) | [email protected]

We remain optimistic that NAFTA 2.0 could be a huge boost to the economies of North America because there is so much to be gained. But we’re also starting to worry: anti-trade rhetoric and posturing could veer the talks towards trouble. There are a lot of contentious issues to resolve in an unreasonably short deadline. Trade, in general, and NAFTA, in particular, are massively unpopular with Trump supporters.

And the decision-making in Washington D.C. around trade issues has become increasingly chaotic, with U.S. business groups pushing back aggressively against nationalists in the administration. We’ve already seen an executive order to withdraw from NAFTA, where President Trump told the Washington Post, “I looked forward to terminating. I was going to do it.” It was the uproar from U.S. business that forced the Trump Administration to reverse its position.

And again this week, the U.S. government appeared poised to make a dangerous decision on steel tariffs. The Commerce department was supposed to brief Congress on the tariffs last Friday, but the meeting was cancelled. Officials are now scrambling to alter the decision after ferocious blowback from U.S. business.

The lesson is clear: the most important group advocating trade is not politicians or (god help us) economists. It’s the business community because businesses understand the real world consequences, the jobs that depend on trade. These folks have a very powerful message that resonates with the general public as well as local members of Congress and Senators. And they are the most credible on the benefits of trade.

It’s exciting to see business at the forefront of this campaign, and we need your help. The Canadian Chamber is organizing visits to key U.S. states, including Tennessee, Texas and Georgia. (We’ve already been to Virginia and South Carolina.) We’ll be meeting local businesses and U.S. political leaders to raise awareness of the benefits of the Canada-U.S. relationship and to point out the risks of damaging it.

Our CEO, Perrin Beatty, recently pointed out, “When you go to Washington and meet politicians on Capitol Hill, you’re just another foreign lobbyist. But when you go out to their congressional district in Memphis, with Canadian business leaders who are investing in the local economy, importing their goods and hiring their workers, then you are priority number one.”

Participants are needed to make this strategy effective. Businesses, large and small, in all sectors are invited. We would also appreciate if you could provide us with information about your relationships in those states— the key suppliers, major investments, etc. Canadian firms with local offices in these states can help by alerting the local branches of our visits and asking them to participate in events or perhaps host site tours, etc. If you’d like to participate or join any of our delegations, please email us.

We’re also playing a direct role in Canada’s NAFTA negotiations. Our CEO met last week with the Cabinet Committee and our Vice President is on the Chief Negotiator’s consultative committee. Our framework NAFTA brief has been submitted to the Global Affairs department. We’ll be providing additional information to our trade negotiators in the coming weeks and months. If you have trade issues that you want us to bring to Canada’s NAFTA negotiators, please email us.

Let’s put the power of the network behind NAFTA. Our economies and our jobs depend on it.

For more information, please contact :

Hendrik Brakel

Senior Director, Economic, Financial & Tax Policy

613.238.4000 (284) | [email protected]

Tick-tock! The U.S. Trade Representative just sent the official notification to Congress that NAFTA negotiations will begin in 90 days. The Canadian government must now negotiate and resolve all the hot button issues with our American and Mexican friends—in the midst of a highly charged political environment. How will it play out?

For the next 90 days, every special interest and aggrieved Wisconsin dairy producer will have a chance to provide input during the consultation period under Trade Promotion Authority. Then, whatever new agreement is negotiated must pass the House and the Senate. All three governments want NAFTA 2.0 wrapped up ASAP. Canada wants to end the uncertainty that is hurting investment, and for our partners, it is even more urgent.

Mexico’s presidential election is set for July 2018 and will be in full election season by the early spring. Polls show the current leader is Andres Manuel Lopez Obrador, a fiery left-wing nationalist who filed a human rights complaint against Mr. Trump and his plans for the border wall. He calls it embarrassing to see the current Mexican government prostrate before Trump. Mexico’s government would dearly love to conclude the NAFTA well before the election.

Similarly, U.S. mid-term elections will be held on November 6, 2018, and Republicans need to show progress on trade. The likelihood of NAFTA passing Congress drops off significantly after the mid-terms.

Gallup points out that when the U.S. President has an approval rating below 50%, his party loses an average of 36 seats during mid-term elections. President Trump’s approval rating is well south of 50%, in the high-30s. If the administration remains mired in scandals, special counsels and the Russian Connection, the Republican house is likely to lose its 31-seat majority. Would a newly-elected Democratic house be eager to pass Mr. Trump’s NAFTA?

No way. Is it even possible to renegotiate NAFTA before the deadlines? The original Canada-U.S. FTA took 18 months (May 1986 to Oct 4 1987), and our governments at the time were the closest of friends.

So it’s possible but very unlikely because of the politics. We often hear from Americans that Canada is not the main target of U.S. trade ire. Canada just needs to give the Trump administration a PR win, which it defines as a big give on supply management and softwood lumber, then it can have whatever it wants— regulatory cooperation, movement of people, maybe even an exemption from Buy American.

But the politics are awful because Mr. Trump’s bullying, blustering threats have made it impossible for Mr. Trudeau or Mr. Pena Nieto to agree to concessions without appearing weak. Their supporters despise Mr. Trump and would be furious. And even if it wasn’t politically poisonous, why should we make concessions for another country’s domestic politics?

There may be another way. The USTR referred to NAFTA modernization as opposed to renegotiation. In the past, NAFTA has been amended extensively without going back to Congress. We could add a chapter on ecommerce, fix the rules of origin and sign a bunch of side letters that could give the Americans the win they need. Let’s hope they take what they can get. Otherwise, NAFTA 2.0 is doomed.

Hendrik Brakel

The Canadian Chamber of Commerce

Senior Director, Economic, Financial & Tax Policy

613.238.4000 (284)

[email protected]