With the fate of the Canada-U.S.-Mexico Agreement ( CUSMA ) currently hanging in the balance, a new survey from KPMG shows the degree to which trade with the United States is of concern to Canadian business leaders. Of the 501 leaders KPMG surveyed, more than ninety per cent believe that the greatest risk to Canada’s economy is a negative outcome in renegotiating free trade with the U.S.

Eighty-eight per cent said losing their existing protections under CUSMA is the greatest risk to their companies, and 84 per cent expect to pay some amount of

U.S. tariffs , even if their goods qualify under a new trade agreement. While the vast majority of survey respondents (88 per cent) agree that the tariffs are having an effect, the impact has been more moderate than expected. Still, the majority of leaders reported that the tariffs have made their businesses less competitive.

Eighty-two per cent also believe that U.S. tariffs against all countries, including Canada, will remain in place.

“Although exemptions for CUSMA-compliant goods are providing an escape hatch from many U.S. tariffs, the framework and rules may change under a new trade deal in the future,” said Joy Nott, partner, trade and customs at KPMG.

“Historically, a North American free trade zone has allowed all three countries to act against global supply chain threats and work together in a highly competitive world trading environment. However, we could see a situation in which a bilateral agreement with the U.S. replaces CUSMA in 2026 and alters the playing field,” said Nott.

Four in five business leaders say they would support a bilateral agreement with the U.S. alone, though a trilateral agreement with Mexico would be preferred. Many leaders said the cost of shifting to overseas markets was prohibitively expensive, with seventy-three per cent saying they could not afford the added costs associated with such a change.

For the time being, many Canadian businesses have taken short-term measures to mitigate the challenges presented by the trade war. Sixty-eight per cent reported they had or were planning to pass along the added costs to customers.

A further 79 per cent of business leaders said they have or are planning to reduce their workforce within the next six months.

The survey also said that 93 per cent of respondents agreed that the unpredictable nature of U.S. trade policies and the cost of accessing the American market are among the most urgent issues facing the Canadian economy.

“The full effect of U.S. tariffs is only beginning to make its way through the economy now. In the initial phase, affected businesses chose to absorb the tariffs, whereas going forward we are expecting to see more businesses pass on the tariff costs through to end consumers,” said Lachlan Wolfer of KPMG Law.

KPMG’s 2025 Federal Budget Survey was conducted between Sept. 11 and Oct. 2 and asked Canadian business owners or executives across all industries about their priorities ahead of the Nov. 4 federal budget.

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