May 4, 2017
In a series of comments targeting the American-Canadian trade relationship, the US administration has created even greater uncertainty among businesses in Canada that benefit from cross-border trade with the United States.
Recent executive actions hurt the cross-border trade relationship
In addition to targeting softwood lumber with hefty import duties averaging around 20%, the American president has also targeted the Canadian dairy and, confusingly, energy industries with bombastic rhetoric, alleging unfair practices.
Behind the noise of these statements, a “Buy American” executive order has initiated a wave of concern among any Canadian-based companies with an interest in the US government procurement market.
Uncertainty is harmful to Canadian businesses
Even in those private businesses not impacted by the most recent executive order has created more uncertainty for anyone doing cross-border business. As NAFTA renegotiation begins to look more drastic than initially thought, there are bound to be changes to the rules of origin that qualify a product for exemption from certain tariffs. This will have a massive impact on the large number of companies that rely on cross-border supply chains to remain competitive.
Lacking any certainty with respect to cross-border trade, investors are questioning whether they should avoid Canada altogether in favour of the United States. Existing Canadian suppliers are also wondering whether buy American requirements could leave them cut out of their existing relationships with US companies. Some may even be considering whether a move to the United States would be beneficial in the long term.
Skilled advice from Toronto lawyers specializing in cross-border business concerns
If your company has any cross-border operations or exports, we can help you navigate uncertainty and provide considered, custom solutions to your tax planning needs as they arise.
To discuss any questions you have about how Buy American provisions may impact your business, contact us online, or call toll free at (877) 275-4792.