Businesses can absorb bad news, but they need to adjust and build a plan to move forward under new conditions.
Those that can adapt to change make it through: an overnight rewrite of supply chain rules when NAFTA became CUSMA in 2020, or a pandemic that upended how goods moved across borders.
They take the blow, adjust course, and, with the right planning, emerge stronger.
Why uncertainty matters more than the shock itself
What businesses struggle with is prolonged uncertainty.
Past shocks had a start and a finish. This time, organizations need to plan for something more ambiguous: an environment where the rules may continue to evolve.
U.S. President Donald Trump’s decision not to renew CUSMA on July 1 doesn’t change much immediately.
Roughly 90 per cent of Canadian exports will continue crossing the border duty-free until the agreement expires in a decade. But businesses are now facing a new reality: annual reviews that could stretch until 2036, with each one creating another opportunity to revisit the rules. The uncertainty now has a timeline, but no clear end.
This may appear to be a trade story, but for businesses, it’s also a tax and customs compliance predicament. The good news is that this is an area where organizations can take practical action today, regardless of what future reviews bring. The ones who keep their documentation clean and their finance teams watching closely will be ready to move when (not if) the rules change.
The question now is: where do Canadian businesses go from here?
Three scenarios Canadian businesses must plan for
The first step is scenario planning. Businesses should build Plans A, B, C and D because annual CUSMA reviews are now part of the operating environment, and each one could produce a different outcome.
What are the possible scenarios?
Scenario one is the worst-case outcome: the U.S. ultimately decides to formally withdraw from the agreement. In that case, businesses need to know the regular duty rate that would apply to their goods entering the U.S., whether the business can absorb that cost at the bottom line, and what changes would be required if it cannot.
That may include adjusting pricing, renegotiating contracts, changing sourcing, moving production, holding more inventory or considering if a U.S. presence is necessary.
That is not just a business problem. Higher duty costs can translate into higher prices, delayed hiring and reduced investment, affecting consumers long before they read another headline about a trade review.
Scenario two is that CUSMA remains in place, but the rules tighten. This is a very plausible outcome, as governments place more scrutiny on supply chains relying on suppliers in jurisdictions associated with forced labour, child labour or other labour-rights concerns. Tightening could mean stricter rules of origin, higher regional content thresholds, or greater documentation requirements.
In that scenario, businesses need to start at the product level: which goods currently cross the border duty-free under CUSMA, how close are they to the line, and what would happen if a modest tightening pushed them out of preferential treatment? If a product no longer qualifies, the business falls back to the regular duty rate, creating a cost that can affect margins, pricing, customer negotiations and ultimately consumers.
Scenario three is that the annual reviews continue, but nothing materially changes from one review to the next. In that case, the risk is not an immediate duty increase or a specific rule change, but the business cost of operating in a prolonged state of uncertainty. Companies can respond by treating annual reviews as a standing compliance and planning cycle, regularly updating documentation, supplier certifications and duty-exposure assessments.
Documentation is your best defence
Across all scenarios, companies should pressure-test the records behind their claims. Supporting documentation must be complete, current and accessible. Preferential treatment is only defensible if the business can prove how the product qualifies.
This work should not sit only with the customs team. It requires co-ordination across finance, tax, procurement, operations and legal.
The common thread across these scenarios is that trade compliance is becoming more closely tied to supply chain strategy. The U.S. wants more manufacturing back on this continent, which cuts against Canada’s instinct to diversify trade relationships globally.
Businesses need to ask now whether their supply chains can flex if that pressure translates into new sourcing rules, documentation expectations or North American content requirements.
The businesses that learn from past disruption and apply it forward will be the ones ready when the rules actually move.
Businesses should expect uncertainty to remain a defining feature of North American trade policy until at least 2036. The question is no longer whether the rules will change, but whether organizations will be ready when they do.
