‘Companies that have spent years building integrated manufacturing and sourcing chains spanning North America must begin preparing now for potential disruption’
Canadian companies are being urged to prepare now for possible disruption as the first formal review of the Canada‑U.S.‑Mexico Agreement (CUSMA) begins this summer.
North American trade has remained relatively strong despite recent U.S. tariff actions, with about 60 per cent of imports from Canada and Mexico into the United States still entering duty‑free, says a new Boston Consulting Group (BCG) report warning that talks could reshape rules in key sectors, including autos and digital services.
The formal review of CUSMA is scheduled to begin in July.
“The U.S. is for almost every Canadian company, the largest export market if they export, and even if they don’t export, the U.S. is such a huge source of imports to Canada, including for further value added, that the trade relationship between the two countries is critical for Canadian companies,” said Michael McAdoo, a Montreal‑based BCG partner who specialises in international trade, in a report from The Canadian Press (CP), which cited the research.
Canadian manufacturers in heavily tariffed industries are seeing declining or stagnant employment despite mixed trends in output and rising prices, with auto, metals and forestry workforces under the greatest strain from the U.S. tariffs, according to a previous RBC Economics report.
Call for ‘command centres’ and scenario planning
BCG is calling on companies to establish dedicated internal teams to track and model the negotiations, noted CP. The report recommends steps such as setting up a tariff command centre “to monitor the situation, along with working through potential scenarios that could impact their business.”
“The command centre provides a global, company‑wide assessment and quantification of a business’s exposure to potential outcomes under different scenarios,” the BCG report said, according to CP
Other suggested preparations include redesigning procurement and manufacturing networks to preserve flexibility and engaging more actively with stakeholders. For employers with integrated North American operations, those moves could affect where production is located, how supply chains are structured and which roles are most exposed to cross‑border shocks.
“Although formal negotiations for USMCA 2.0 are still months away, companies that have spent years building integrated manufacturing and sourcing chains spanning North America must begin preparing now for potential disruption,” the report said, as CP reported. “Those who act now to put contingency plans in place for various outcomes will be ready to move quickly to seize competitive advantage out of uncertainty in a shifting trade and investment landscape.”
Three trade scenarios for Canada to consider
The BCG report outlines three possible outcomes from the review: an extension of CUSMA with targeted changes to side agreements; a completely renewed three‑way deal; or the termination of CUSMA and its replacement with bilateral agreements, according to CP.
McAdoo said a narrower set of issues on the table would indicate momentum toward an extension with limited changes, while talks proceeding under a more “conventional free‑trade agreement structure” with “robust stakeholder engagement that continues for months” could signal a full renegotiation.
He added that bilateral agreements are another possibility. Separate deals with the United States or Mexico would create operational challenges, “including for U.S. companies with potentially conflicting or incompatible trade rules to manage across an integrated North American value chain.” That kind of fragmentation could complicate compliance, investment decisions and workforce strategies for employers operating on both sides of the border.
The CP report also notes that Canada has begun political groundwork ahead of the review. Canada’s new chief trade negotiator to the United States, Janice Charette, met her American counterpart in Washington, joined by Trade Minister Dominic LeBlanc and Canada’s newly appointed ambassador to the United States, Mark Wiseman, as Ottawa seeks to steady the bilateral relationship.
Ontario funding for employers
Meanwhile, Ontario is moving to support companies already feeling tariff pressure. In a March 11 news release, the province announced more than $7.3 million in funding through the Ontario Together Trade Fund (OTTF) for eight companies in Windsor and the surrounding region, supporting 758 jobs and leveraging nearly $44 million in near‑term investment.
“As Canada’s largest bordering city to the United States, Windsor’s manufacturers have been disproportionately impacted by tariffs, which is why our government introduced strategic measures to drive forward their economic resilience,” said Vic Fedeli, Minister of Economic Development, Job Creation and Trade. “Through the Ontario Together Trade Fund, we will ensure Ontario’s workers and businesses have the tools they need to adapt in the face of external pressures, protect jobs and enhance their long‑term competitiveness.”
Beneficiaries include auto‑parts suppliers Canadian Electrocoating Ltd. and Central Stampings Ltd.; Dimachem Inc., a chemical manufacturer; and several tooling, plastics and engineering firms.
Dimachem vice‑president Andrew Conway said the OTTF support is “a catalyst for our new $9M plant expansion, enabling us to pivot away from tariff‑exposed sectors and allowing us to provide domestic chemical product solutions for the manufacturing, aerospace, clean‑tech, and agritech sectors.”
Donald Rodzik Jr., director of operations and general counsel at the NARMCO Group, said “recent tariffs and US onshoring have called into question the viability of the Canadian automotive supply industry,” adding that with provincial backing, Canadian Electrocoating and Central Stampings are “positioning themselves to continue to be competitive domestically and globally into the future.”
Recently, a new $200-million initiative is seeking to protect workers and communities facing direct and indirect impacts from tariffs and shifting global trade patterns in Ontario. That followed a similar $70.4-million funding in British Columbia.
