‘The days of a comprehensive free trade deal are over;’ Canadian businesses have to accept some tariffs: trade expert
Canada temporarily avoided 50-per-cent U.S. tariffs on approximately $28 billion worth of goods Wednesday after U.S. President Donald Trump announced a three-day pause on the levies, following a period of intense negotiations as the two countries raced to finalize a deal. With Canadian Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer signalling that an agreement had been reached in principle, the news offered a brief reprieve from months of volatility – but for business and human resources (HR) leaders managing Canadian workforces, the deeper question is what comes next.
While an agreement may have been reached pending review and signing, its durability – and what it means for Canadian businesses – depends entirely on the details still being negotiated, says Mahmood Nanji, Power Corporation of Canada Fellow and former Director of the Lawrence Centre at the Ivey Business School at Western University in London, Ont.
"It appears at this time that there is some sort of an agreement, but if they say ‘subject to documentation,’ is it an agreement in principle? Is it terms of reference that they've identified?” says Nanji. “But the good news is that there is an agreement and the tariffs that were supposed to come into effect have been avoided for the time being."
Beyond trade: a new economic architecture
The emerging deal is likely to be far broader than a conventional trade agreement, according to Nanji. He points to Greer's own description of a "comprehensive market access agreement" covering economic security and digital alignment, as well as Trump's mention of the Keystone XL Pipeline – a signal, Nanji believes, of an energy component embedded in the broader framework.
Despite the apparent breakthrough, Nanji cautions against viewing it as a return to the preferential market access Canada enjoyed under the Canada-United States-Mexico Agreement (CUSMA). All tariffs imposed since January 2025, he notes, have been applied in violation of CUSMA's terms – and a new deal doesn’t erase that precedent.
"The days of a comprehensive free trade deal are over," he says. "The United States and the Trump administration has made it very clear that it has a protectionist trade policy – a trade policy that very much believes that in order to have access to the world's largest market, you need to pay a market access fee, which in essence is the tariffs."
Canada's average tariff rate currently sits at approximately three per cent, with 85 per cent of Canadian products entering the U.S. tariff-free, compared to an average rate of more than 11 per cent for other trading partners, according to Nanji. Any deal is likely to erode that advantage, at least partially – a cost Canadian employers will need to factor into their workforce and investment planning, he says.
“Canadian businesses are going to have to live with some level of tariffs, certainly for the rest of the Trump administration, and it’s yet to be seen whether in future years future presidents might be willing to negotiate this again,” says Nanji.
The HR impact of sustained tariff pressure
The cost of uncertainty has already been substantial. Canada's private sector shed approximately 112,000 jobs in the first four months of 2026, while around 8,700 public sector positions were also eliminated, according to Statistics Canada. A separate report by Oxford Economics, prepared for the Canadian American Business Council and released on Aug. 10, projected that a full breakdown of CUSMA could cost Canada as many as 102,000 jobs, while a successful renegotiation could add approximately 98,000.
"Canadian firms are not going to be hiring – they’re going to be looking at contracting because of the uncertainty,” says Nanji, referring to a July 2026 KPMG survey that revealed four in 10 manufacturers have moved production to the U.S. or are considering doing so as they adapt to ongoing trade uncertainty. “If there's a deal now, other firms which haven't already moved won't need to make that decision – they'll make the investments and grow their operations in Canada, because Canada still has very good access to the world's largest economy."
Small exporters have faced the steepest climb. A survey of 1,833 Canadian Federation of Independent Business (CFIB) members conducted between July 28 and August 6 revealed that small Canadian exporters are already freezing hiring and investment just to remain viable – a direct drag on talent acquisition across export-reliant sectors that HR leaders cannot afford to ignore.
Importantly, even a deal is unlikely to return Canada to a tariff-free baseline, says Nanji. Tariffs will be built into any future trade agreement with the United States. according to Greer himself – meaning some level of cross-border cost will persist regardless of the outcome of the current talks.
Resilient leadership: pivoting strategy and diversifying markets
For Nanji, the tariff crisis has exposed a structural vulnerability that HR strategy must address directly: over-reliance on a single market. Approximately 67 per cent of Canadian goods and services exports went to the U.S. according to Statistics Canada, though that figure has begun to shift as businesses explore alternatives – it’s dropped from just over 70 per cent in 2024 and nearly 72 per cent in 2022.
"Moving from [67] per cent exports to the United States to 60 per cent is really possible with other markets – growing markets in Europe, in the Middle East, in Asia, in Africa," he says. "Our small and medium-sized enterprises, which have become a bit too comfortable with this big market, need to now explore new markets."
He points out that Canada holds a significant – and underutilized – competitive advantage in that effort: Canada is the only country in the world with 15 free trade agreements, and the only one with agreements covering all seven G7 nations, according to the federal government’s Trade Commissioner Service. That access creates genuine opportunity for organizations willing to build talent and go-to-market strategies around it, says Nanji.
“Canadian businesses need to leverage that, and that all of that will mean that Canadian talent will be able to stay here and participate in the Canadian economy, as opposed to Canadian talent leaving because they realize that their opportunities in Canada are limited by these restrictive measures like tariffs,” he says.
Carney has pledged to defend Canadian workers from the impact of U.S. tariffs and government support programs are available to help tariff-affected employers manage the transition. But Nanji argues that businesses need to meet government halfway – a relationship he says has historically been undervalued on both sides.
"That relationship has to be bridged. It's critical to Canada's economic competitiveness," he says. "Businesses need to stop thinking that government is just a blocker or an impediment – government can play a huge, huge role for businesses."
Adaptive workforce strategies
The mindset shift required of business and HR leaders goes deeper than trade policy. It’s about organizational agility, risk appetite, and the capacity to attract and retain talent in a faster-moving, more competitive global environment, and organizations with adaptive workforce strategies are already separating themselves from those still waiting for certainty that may never fully arrive, according to Nanji.
"Resilient leadership is going to be about people going outside their comfort zone," Nanji says. "It’s going to be companies looking at the ability to pivot and pivot quickly – hiring the best talent that can do that and taking some more risks comes part-and-parcel with that."
Canada's fundamentals remain strong, says Nanji – stable governance, skilled talent, reliable infrastructure, abundant natural resources, and a leading position in technology. For organizations that plan deliberately, diversify thoughtfully, and lead with agility, the disruption carries real opportunity.
"This is a moment where, if you don't take some risks, you may get left behind or just wiped out completely," says Nanji. "Canada's talent is needed by the world and we need to leverage that."
