Ottawa delivers relief to businesses in the face of escalating U.S. tariffs
Perhaps the most daunting aspect of the U.S. government’s trade strategy, which apparently involves the announcement of punishing new tariffs without notice, is the lack of economic predictability for business leaders. Anxieties over where to invest—if at all—are giving owners of small to medium-sized businesses in both the U.S. and Canada reason to pause crucial innovation and productivity-boosting spending. For some entrepreneurs in this country, the news from the White House seems to worsen by the day.
This week the Trump administration took unexpected trade action yet again, issuing new tariffs of 10 per cent on imported softwood lumber and timber, and putting a 25 per cent levy on upholstered furniture, kitchen cabinets and bathroom vanities, all of which will take effect on October 14th, 2025. These came on the heels of tariffs of 100 per cent on patented drugs and 25 per cent on heavy duty trucks, announced in the weeks prior.
The potential impact of these onerous new duties will be significant as they take hold across affected Canadian industries. The Trump administration’s decision puts added pressure on the Carney government to respond, to support hard-hit sectors and to work to repair an already strained cross-border trading relationship as questions linger about the longer-term implications for Canadian exporters. Recently, Ottawa introduced an extensive new package of tariff relief measures designed to support many of these industries and affected workers as they continue to adapt to shifting trade dynamics.
The key measures for business include:
- A $5 billion Strategic Response Fund (SRF) to assist companies in sectors heavily exposed to trade disruptions. The SRF is designed to help firms facing revenue losses or job reductions. Businesses can potentially use SRF funding for everything from retooling production lines to expanding into alternative export markets. The measure will prioritize large-scale projects with front-end development and capital costs, and those deemed critical to maintaining industrial or skills capacity. Projects that receive matching funding commitments from the provinces and territories will also be prioritized
- A $450 million package over three years to retrain as many as 50,000 workers, providing access to targeted training and financial assistance to help affected workers remain in the same position or “… fill in-demand jobs”
- Immediate liquidity relief for tariff-impacted sectors, increasing the maximum loan available to SMEs through the Business Development Bank of Canada to $5 million from $2 million, along with offering lower interest rates and longer maturities on loans issued through the Large Enterprise Tariff Loan Facility
- An increase to $1 billion from $450 million over three years for the previously announced Regional Tariff Response Initiative. The program supports SMEs directly or indirectly impacted by U.S. tariffs. Not-for-profit organizations are also eligible for the program
- A review of the Electric Vehicle Availability Standard (EVAS) and a removal of 2026 zero-emission vehicle sales targets
- $370 million over two years in biofuel production incentives to support canola and agriculture producers, and $75 million over five years to expand agri-marketing programs
- A temporary doubling of the interest-free portion of canola advances to $500,000 under the Advance Payments Program
- A Buy Canadian mandate to purchase mainly Canadian-made or sourced materials in all federal projects (where possible)
- 20 extra weeks of Employment Insurance benefits for qualifying long-tenured workers (to a maximum of 65 weeks). The extension will take effect on October 12th, 2025, and will apply retroactively to claims started on June 15th, 2025
- An extension of two EI measures to April 11th, 2026—a waiver of the one-week waiting period to claim EI, and a suspension of the rules on the separation of payments, enabling workers to retain severance payments while receiving EI benefits
- $382 million over five years for new Workforce Alliances and $50 million for a Workforce Innovation Fund to help businesses and workers navigate a changing labour market
- $50 million over five years to modernize federal online job search platforms
The measures will undoubtedly provide a degree of short-term relief for impacted sectors, but their long-term effectiveness will depend on how quickly businesses can adapt and find new efficiencies, seek out new markets for their goods (where possible) and potentially absorb or pass on tariff-related costs. Notwithstanding this support, the continued surge in the cost of inputs will ripple through supply chains, particularly those dependent on lumber, furniture or related products, while downstream effects may extend further.
Ottawa’s response illustrates a shift toward resilience planning, with emphasis on skills development and industrial flexibility. Either way, the latest U.S. tariffs highlight the vulnerability of many Canadian industries to tariff-driven protectionism. For companies and individual workers, continuing to prepare for future structural changes to the Canadian economy should be their main priority.
Armando Iannuzzi, Co-Managing Partner
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