Provincial and Trade Relations Updates for Canadian Businesses the Week of September 13
Introduction: Canada-U.S. Trade Relations
Canada-U.S. trade relations have moved from negotiation into a more openly retaliatory phase. Canada implemented counter-tariffs on September 8 after talks collapsed in August, prompting the Trump administration to respond with new import restrictions, expanded tariffs and measures targeting Canadian access to U.S. government procurement. Washington says Canada walked away from a near-final agreement, while Ottawa maintains the final U.S. demands were economically unacceptable and would have undermined key Canadian industries. Despite the escalation, Prime Minister Mark Carney has signalled that Canada remains open to renewed negotiations while increasingly focusing on domestic investment, new export markets and reducing Canada’s dependence on a single trading partner.
The impact is increasingly visible at the provincial level. Governments are expanding tariff-relief programs, changing procurement policies and responding directly to pressure on exporters, manufacturers and resource industries.
What's happened in provincial government
Trade disruption is becoming one of the defining provincial economic issues. New Brunswick will restrict American goods and services in major government contracts beginning October 1 as several provincial exporters face new U.S. tariffs and import bans. Ontario is expanding eligibility for tariff-relief programs while Premier Doug Ford continues supporting Ottawa’s decision to reject the proposed U.S. agreement. Manitoba businesses are calling for more targeted assistance, Saskatchewan manufacturers are increasingly caught between U.S. duties on Canadian exports and Canadian tariffs on imported components, and British Columbia’s forestry sector is warning that tariffs are accelerating an already serious competitiveness crisis.
Outside trade, provinces remain focused on electricity costs, infrastructure, housing, healthcare capacity and regulatory reform. Nova Scotia is reconsidering electricity regulation, Newfoundland and Labrador is preparing for major decisions concerning Churchill River power development, Quebec’s election campaign is intensifying around fiscal and economic policy, and Alberta continues debating energy infrastructure and its broader relationship with the federal government.
How this impacts businesses across Canada
- Manufacturing & Exporters: Companies selling into the U.S. increasingly face both direct tariffs and indirect supply-chain costs. Saskatchewan manufacturer Supreme Steel illustrates the problem: U.S. tariffs affect its exports while Canadian counter-tariffs increase the cost of components purchased from American suppliers.
- Government Procurement: New Brunswick will prohibit American goods and services in government contracts worth more than $5 million beginning October 1. Similar Buy Canadian policies could create opportunities for domestic suppliers while disrupting existing U.S.-based procurement relationships.
- Forestry & Natural Resources: British Columbia’s forestry organizations say the sector is approaching a breaking point because of tariffs, regulatory delays and existing competitiveness pressures. Businesses connected to logging, transportation, pulp, paper and value-added manufacturing face elevated risk.
- Tariff Relief & Financing: Ontario has expanded access to two relief programs for affected businesses and workers, while other provinces are under growing pressure to provide targeted assistance.
- Energy & Utilities: Nova Scotia is considering tying utility profits more closely to performance, while Newfoundland and Labrador is preparing for major Churchill River electricity decisions. Saskatchewan has also defended continued fossil-fuelled power generation. Together, these developments reinforce energy affordability and grid reliability as major business issues.
- Healthcare & Workforce: Nursing shortages in P.E.I., physician distribution challenges in Manitoba and private-sector healthcare debates continue to highlight Canada’s healthcare workforce constraints, with implications for employers competing for talent.
- Political Uncertainty: Quebec’s October 5 election and Alberta’s October 19 referendum could materially affect provincial economic, regulatory and investment policy over the coming months.
What to pay attention to moving forward
Businesses should closely watch whether Ottawa and Washington restart substantive negotiations. Prime Minister Carney has characterized the latest U.S. measures as relatively limited and has signalled restraint rather than immediately escalating further, suggesting Canada may be trying to preserve room for diplomacy.
- Watch September 15 and September 29. New U.S. tariff changes affecting certain Canadian goods are scheduled for September 15, while import restrictions on selected products are expected later in the month. New Brunswick businesses including beverage and food producers are among those directly exposed.
- Watch government procurement. New Brunswick’s October 1 procurement restrictions may become a model for other jurisdictions. Businesses selling into the public sector should monitor Canadian-content requirements and opportunities created by supplier replacement.
- Watch the automotive and metals sectors. Washington continues signalling the possibility of additional pressure on vehicles and metals in 2027. Companies throughout the automotive, steel, aluminum and advanced manufacturing supply chains should continue scenario planning.
- Watch provincial relief measures. Manitoba businesses are already warning that prolonged tariffs could result in reduced production, postponed investment and job losses. Governments may increasingly respond with financing, tax relief, procurement preferences and workforce programs.
- Watch Canada’s diversification strategy. Ottawa is actively promoting Canada to international investors and positioning major infrastructure, energy, technology, defence and manufacturing projects as alternatives to dependence on U.S. investment and trade.
US–Canada Relations Overview
On September 8, Canada’s counter-tariffs came into force. The Trump administration responded the same day by invoking Section 338 of the Tariff Act of 1930 to restrict selected Canadian imports and adjust existing tariffs, arguing that Canada’s retaliation discriminates against American exporters.
The U.S. subsequently announced measures affecting selected Canadian dairy products, alcoholic beverages and other goods, alongside plans to reduce access for Canadian businesses to U.S. federal procurement. Some tariff categories were also expanded while others were removed, illustrating that Washington is increasingly using sector-specific pressure rather than relying solely on broad tariffs.
Canada’s response has so far been comparatively restrained. Prime Minister Carney described the latest U.S. action as “relatively modest” and indicated Ottawa would not automatically respond to every measure with additional retaliation. The federal strategy increasingly emphasizes domestic economic resilience, international investment and diversification while leaving open the possibility of renewed negotiations.
Provincial approaches are also beginning to diverge. New Brunswick is moving toward procurement restrictions, Ontario remains among the most outspoken critics of the Trump administration, while Alberta continues emphasizing diplomacy and maintaining cross-border energy relationships.
Key issues to watch
- Whether formal trade negotiations resume before further tariffs take effect.
- U.S. import restrictions scheduled later in September.
- Potential additional limits on Canadian participation in U.S. government contracts.
- Automotive, steel and aluminum measures heading toward 2027.
- Expansion of Canadian provincial Buy Canadian procurement policies.
- Pressure from U.S. businesses and consumers affected by Canadian retaliation.
- Canada’s efforts to attract international capital and accelerate non-U.S. trade relationships.
Business takeaway:
The relationship is becoming increasingly transactional. Companies should assume that political risk will remain part of Canada-U.S. trade planning even if the governments ultimately reach another agreement.
Recent News on the Trump–Iran War Situation
The U.S.-Iran war has now evolved from what markets initially treated as a short-term geopolitical shock into a prolonged conflict with growing economic consequences. Reuters reports that the war is entering its seventh month, global oil inventories have fallen sharply, fuel shipments are under pressure and crude prices have climbed above US$100 per barrel. Disruptions around the Strait of Hormuz, Red Sea and Saudi energy infrastructure are increasingly affecting the broader global energy system.
Regional escalation is also continuing. Iranian-aligned forces have expanded pressure around Yemen and the Red Sea, while attacks on Saudi energy infrastructure have further complicated efforts to redirect oil exports away from the Strait of Hormuz. The conflict is increasingly being compared with previous prolonged U.S. military engagements because Washington has yet to establish a clear pathway toward ending hostilities.
President Trump said on September 13 that the United States could potentially maintain a presence in Iran and seek access to Iranian oil resources following the conflict. He also suggested the war could continue beyond the U.S. midterm elections in November, indicating there is currently no immediate expectation of resolution.
The economic consequences are becoming increasingly important. The Trump administration is reportedly considering using the Defense Production Act to expand U.S. refining capacity as elevated crude prices translate into higher fuel costs. American refineries are already operating near maximum capacity, limiting Washington’s ability to quickly offset the supply shock.
Business takeaway:
Canadian businesses should treat the Iran conflict as an energy, inflation and supply-chain risk rather than a distant geopolitical event. Higher oil and diesel prices can quickly flow into transportation, aviation, manufacturing, agriculture and logistics costs. Combined with Canada-U.S. tariffs, businesses are effectively facing two external cost shocks at once, making margin protection, sourcing diversification and scenario planning increasingly important.