Since January 2025, Canada–U.S. trade relations have been marked by mounting tension and rapid developments. On February 1, the United States announced plans to impose sweeping tariffs, including a 25 percent levy on most Canadian imports and 10 percent on energy products, while granting a 30-day pause to allow for negotiations. When talks stalled, these broad tariffs officially took effect on March 4. Days later, on March 12, the U.S. imposed 25 percent sector-specific tariffs on Canadian steel and aluminum, which remain in place and were increased to as high as 50 percent in June.
Canada responded with retaliatory tariffs on a range of U.S. goods. In June, the situation escalated again when Canada proposed a 3 percent Digital Services Tax on foreign tech giants. The U.S. temporarily suspended trade talks in response. Just hours before the tax was set to take effect, Canada withdrew the measure to reopen dialogue.
Now, attention turns to two key dates. July 9 marks the point at which existing U.S. tariffs could be broadened or intensified if no agreement is reached. July 21 is the deadline both countries have set to finalize a broader trade deal. The outcome of these negotiations will significantly influence economic conditions in the months ahead.
What This Means for Cowichan
Cowichan may not be home to large-scale steel or automotive manufacturing, but regional businesses are still affected by trade uncertainty. Higher input costs, disrupted supply chains, and changing customer demand can all trace back to international policy shifts. For example, local fabricators, food producers, or packaging companies may see rising costs if U.S.-sourced materials become more expensive or delayed.
At the same time, new opportunities are emerging. A renewed focus on domestic supply chains and local procurement is helping open new markets for Canadian producers. With consumers increasingly aware of where their goods come from, Canadian-made products are seeing increased attention.
Internal Trade Barriers Are Coming Down
In a significant domestic shift, the federal government eliminated all 53 of its remaining exceptions under the Canadian Free Trade Agreement in June. It also passed the One Canadian Economy Act, designed to reduce interprovincial trade barriers and enhance labour mobility. Provinces including Ontario, Manitoba, and Nova Scotia have passed legislation to support mutual recognition of goods and professional credentials across provincial lines.
While British Columbia has not yet introduced its own legislation, the province has signaled support for improving internal trade and is expected to continue working within the Canadian Free Trade Agreement framework to reduce regulatory barriers.
These changes are expected to reduce costs, remove red tape, and unlock new market access. For Cowichan businesses, this could mean easier expansion into other provinces and simplified logistics and compliance processes.
Strategies Businesses Are Taking
Many Cowichan businesses are already adapting. Strategies include:
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Diversifying export markets beyond the U.S.
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Strengthening relationships with domestic suppliers
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Increasing operational flexibility
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Targeting Canadian consumers who are actively seeking local alternatives
This is a time for pragmatic business planning. In an unpredictable trade environment, businesses that build resilience into their operations will be better positioned to navigate both immediate challenges and long-term shifts. Whether tariffs increase or trade conditions stabilize, local businesses that remain adaptable and connected to regional networks will be in a stronger position to manage change.
Support Is Available: Export Navigator
Export Navigator is a free advisory service designed to help small and medium-sized businesses expand beyond local markets. Whether you’re navigating trade barriers, entering new provinces, or developing an international export strategy, Export Navigator can provide personalized guidance and tools. You can connect directly with our regional export advisor, Brady Calancie, at brady@exportnavigator.ca.
Looking Ahead
Economic Development Cowichan continues to monitor these developments closely. If a new trade agreement is reached before July 9 or July 21, it could bring greater stability. If not, businesses should be prepared for continued volatility this summer and into the fall.
Today’s news that the United States is reportedly close to finalizing multiple international trade deals underscores just how quickly conditions can change.
We remain committed to helping Cowichan businesses stay informed and prepared. As the trade and tariff landscape continues to evolve, Economic Development Cowichan will share timely updates and provide the support needed to navigate this shifting terrain.
