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Okay, let’s get going. It looks like we have a good chunk of people in the room here.

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So hello, everyone. Thank you so much for joining us today. My name is Michael Black. I’m a partner at Richter in our strategy and transactions group.

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On behalf of the entire Richter team, thank you so much for joining this webinar, Navigating Complexity.

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Strategies for Canadian businesses amid the US tariffs. We’re glad to have you join us. We hope that you find this an insightful conversation. We’re excited to have you join us and hopefully we’ll get some good questions and interaction from the audience.

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Before we kick off, though, just for those who aren’t familiar, just a little bit about Richter. Richter is a business family office. We provide strategic advice on both business and family matters from a financial, personal perspective and across generations. So this isn’t just for one or two businesses. This is for any family privately held business that’s out there.

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With over 100 years or almost 100 years of experience advising at this intersection of family and business.

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We have an integrated approach to help our business owners find their success. And that’s where you see our firm has grown to reach 70 partners and over 700 team members.

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Really, our success is rooted in our two platform model, which allows us to advise at the intersection of the business and family.

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Where on one side, we’re helping the business with their objectives, their corporate goals. How does the business help them get to that? And on the other side, their family goals and objectives from wealth management, the administration and operations of the family enterprise.

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With today’s hot topic, though, it’s tariffs. So with the escalating US tariffs creating uncertainty for Canadian businesses.

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Proactive strategies are more required and critical than ever. We know that most people on the call here are probably facing rising costs, supply chain disruptions.

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And operational challenges. And it’s putting pressure across the board in all segments of our economy.

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And so we know that you as entrepreneurs and business owners need to quickly adapt and protect your businesses for your long-term success.

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This is going to require a forward-thinking approach, one that safeguards both your business interests and your family interests and ultimately your legacy for both.

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To dive into this topic today, I’m joined by my colleague Stefan Marcassa, who’s a partner also at Richter in our tax practice.

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Hi, Michael.

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So, Stefan, why don’t you get us started here around just give us an overview of the current situation of what’s happening in tariffs. I know we had big announcements yesterday. It’s been an ongoing saga for months, years, it feels like, but Why don’t you kick it off in terms of an overview of tariffs and where we currently stand in the world?

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Yes.

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Yes. So just before starting, just to, so the session will be in english But for the participant who are francophone

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So before looking at all those different tariff that was announced You know, a quick reminder of what tariffs are.

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What is a tariff? Well, it’s a custom tariff. A custom tariff is a duty that applies to goods at a time of importation.

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Who pays the tariff? Well, generally, the legal liability to pay the tariff resides with the importer of record.

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Who typically pays the duty at the border to the border agency, which is the US Custom and Border Protection on the US side.

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And the Canadian Border Services Agency on the Canadian side. How to calculate the tariff, the tariff is calculated on the percentage of the value of the import.

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But the classification code of the product and also its country of origin are essential to determine the rate.

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On which the tariff will apply. How do this tariff impact competitiveness? Well, for importers, it can drive up the cost to make products.

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Leading to lower margin or price increases. And for explorers, you can make your product less price competitive, forcing customer to look elsewhere to find a non or less tariff impacted goods.

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So here what you have on the screen is the timeline we have it’s not everything that is there. We put mostly the tariff that was announced by the Trump administration, if we wanted to add everything that was out there, all the retaliation tariff from Canada and worldwide, I mean, we wouldn’t

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Have made a much bigger template. So the focus today, what I want to go through is perhaps the four important tariff for Canadian businesses.

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So tariff, if the The new prime minister, Mark Carney, mentioned recently that the tariff threat is the most significant crisis of our lifetimes.

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It seems that Canadian business owners believe the same According to the Canadian Federation of Independent Businesses.

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Its latest survey on the business confidence index registrar is more severe fall ever.

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It had to reach a lower mark than it did during the 2020 pandemic the 28th financial crisis or 9-11.

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So it’s really important for Canadian businesses fourth area. The first one is the one that was announced on February 1st, which is, you know, the blanket 25% tariff on all Canadian products.

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Excluding energy, which was serif at 10%. Trump administration also announced 25% for Mexico and 10% for for China.

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Now, Trump mentioned that those tariff words required because of a public health crisis and a national emergency because of illegal importation of fentanyl and illegal immigration.

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So I will refer to that tariff as the fentanyl tariff.

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For the rest of the rest of the the presentation.

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They were initially being Bose starting on February 4th.

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2025. And then we know what happened. Mexico sent 10,000 soldiers to the border.

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Canada has this plan to secure the border, 1.3 billion. We’ve named fentanyl tsar.

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And then there were some discussions with the trauma administration. And then finally it was announced last minute on February 3rd.

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That the tariff would be delayed for another month.

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But nothing has changed because Trump announced on March 2nd that the tariff will go ahead on march 4 and they also announced that China would be increased from 10% to 20%.

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So March 4, Canada retaliates against the fentanyl tariff.

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Imposing 25% on tariff on 155 billion of US products in two phases.

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The first phase was the first phase was On March 4, it applies on 30 billions of u.s product And it’s very specific to a list of products that are being targeted, which include I have orange juice, alcohol, appliances, motorcycles, cosmetic

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And so to other products. The second phase, which is not being implemented, yes, was additional countermeasure for 125 billion worth of US product.

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And Canadale provided a 21 days consultation period for getting feedback from business and the public on those additional tariff.

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Then March 5th you know so so the The tariff of trump came into effect on March 4.

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March 5th, they had a call with the major U.S. Automaker in the US because they were in a panic.

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And then on March 5th, he announces that those tariffs will be postponed for uh Well, the automobile sector And also on March 6th, then again with further conversation with the trauma administration they reduce the tariff and the exempted the canadian products that are

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Compliant with the UMCA. Okay, so it’s the United States, Mexico, and Canada agreement.

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So when Canada talks about that free trade agreement, they’ll refer it as CUSMA, Canada, United States, Mexico Agreement.

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When the US are talking about that agreement, it’s the USMCA. So KUSMA, USCA, Same thing as the same agreement.

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The next one is the steel and aluminum tariff. It was announced on February 10th and 11 by executive orders and essentially it’s a 25% tariff that applies globally. So it’s not just Canada.

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On raw semi-process or any derivative steel and aluminum imports into the US.

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There was an exceptions for, let’s say a canadian derivative products that if they are made of components part of those products that are being processed with US steel and aluminum, then those tariffs will not went out of line.

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Again, the day after Canada retaliates by imposing 25% tariff on another chunk of 29.8 billion of US products. So Canada is following a dollar for dollar approach on those tariffs.

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So since we’re exporting much more steel and aluminum to the US than on the other side.

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So when you look at the list of products that were targeted. It includes all the US steel and aluminum, but it also includes all the products such as tools smartphone, computers and server.

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Lighting products and support equipment.

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The next one is the automobile and parts tariff. It was… initially announced there was a trip at the beginning on February 18 But then on March 26, this is when the Trump issued a proclamation that officially imposed the 25% tariff, which started on April

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Third, 2025. So it’s a 25% tariff on all imported passenger vehicles and light trucks.

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And also some key automobile parts such as engines, transmission. Power trin parts and electrical components.

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The rules are such that the importer of automobiles under the USMCA will be given the opportunity to certify the US content.

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And system will be implemented such that the 25% tariff will only apply to the value of their non-US content.

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For the USMCA compliant automobile they will remain tire free for now.

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Until the Secretary of commerce In consultation with the US Custom and Border Protection, we’ll establish a process to apply tariff on their non-US content. As of today, there’s no retaliation tariff that was announced so far by Canada.

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However, on March 27, Mark Carney propose that there will be a 2 billion funds that will be put in place for the auto industry.

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The last one, which happened yesterday is the reciprocal tariff.

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So initially, Trump was saying that they would impose equal tariff by the US to those employed by other countries on US product.

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So if you want to have very similar tariff for each of every single products the economists estimated that 2.5 million individual tariff rate would be required on a good by good, country by country, reciprocal tariff plan so it was not

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Feasible. So what happened yesterday is that Trump announced

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A much more broader tariff that applies by country.

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So starting on april 5th. There’s a baseline worldwide tariff of 10%.

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Which is subject to specific exclusion and we will get to that And then on April 9th.

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Then if you are part of a list of countries that has higher rates.

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Then those rates will apply starting April 9. So countries that are part of the European Union.

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Will have a rate at 20%. And China will be at 34%.

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So what is excluded from those reciprocal tariff Products of Canada and Mexico that are subject to the fentanyl tariff.

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That means that that means that No tariff will apply on Canadian products that comply with the USMCA.

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And 25% will still apply on Canadian products and 10% on the energy that do not comply with the USMCA.

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Trump mentioned that If the fentanyl tariff was terminated or suspended later on, then no tariff will apply for the USMCA compliant goods And for the non-compliance USMCA goods, then a 12% tariff will apply.

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Also excluded from excluded the reciprocal tariff are the products that are subject to the steel and aluminar.

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And also those products that are subject to the automobile and parts tariff. So what that means is that For Canada, it was not very Bad news yesterday, it could have been much worse. So the fentanyl There’s still an aluminum tariff and the automobile tariff will continue to apply

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But Canada for now is being exempt from those reciprocal tariffs.

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So I think as everybody thinks, Stefan, for walking through that, as everybody can appreciate, there’s been a ton of back and forth over the past, just this is only going back to February, but really This started right after the US election, right? So if you’re a little confused as to what signaled, delayed, enacted, what’s exempt.

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You’re not alone. There’s a lot of people out there that are still trying to figure this out, including a lot of governments. And you’re seeing, you know, we talked about some of Canada’s retaliation that’s happening. But I think in the next days, weeks, probably months as well, in addition to the uncertainty around what the Trump administration is going to do with future tariffs.

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Seeing what the response is from different countries that have now been impacted by this significant reciprocal tariff that really is worse than, I think, than most people expected, that’s going to be interesting to watch where you’ll see countries like Singapore, the UK really questioning and even Mexico to a certain extent.

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Should we respond to this? Then you have Canada, the European Union, British forceful response.

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And then you have a whole bunch of shades in between there.

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But now we want to understand from the audience here as we go, you know, just one quick engagement mechanism. So it would be great if everybody could, you know.

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Come back to the screen for a second and answer in terms of a poll question here.

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What comes to mind when you think of tariffs? So you should have popping up shortly.

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A text box. It’d be great if you could just write in one, two, three words, whatever we’re going to aggregate this. So I think you should see the pop up now.

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Quick thoughts on this. We’ll give a couple seconds for people to respond.

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And we will send out sort of in part of our follow up the detail, but we’re just going to watch here behind the scenes some of the words that pop up.

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Cost. Lower sales.

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Threats. Yeah.

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It’ll give it another 10 seconds.

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I’m just going to put some of these on the page quickly.

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All right. Serge, do you want to bring down the poll question? We’ll close it out there.

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And then when ready, let’s see what some of the words were that popped up here in our responses.

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Higher costs, won’t last. Why? Great question. Lower sales, uncertainty, big threat yeah This echoes in terms of what we chat about in the halls of Richter, as well as what we’re hearing from our clients.

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And so thank you for that. We’ll send out the detailed sort of word cloud afterwards. But this doesn’t surprise us. We kind of expected that we would see some of this.

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But now as we get into the next part of this and we talk about some of the strategies to deal with these tariffs or to address them, right? What we’re trying to do in today’s session, now that we know sort of the lay of the land and where we are.

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Is really what are some of the immediate tangible activities that you as an owner, you as an executive, you as an entrepreneur can implement that try to soften the impact. Because we’re not here to say that there’s a golden answer to all of this, the silver bullet.

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But there are some things that you can and should be doing today in response to this current situation.

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And then, you know, there’s other things that we’re going to talk about in the latter part of the conversation today, just before we get into the Q&A around some of the more medium and long-term actions that you can take because This entire situation has opened up, I think, a lot of eyes around the world, particularly in Canada as well.

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As to some of the risks that a reliance on an economy like the US can pose.

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Lots of benefits to it, but also lots of risks. So, yeah.

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Michael, I wanted to have like a few points on the tariff before moving ahead.

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Yeah. Okay.

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Right.

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Just to let people know that you know those tariffs, they do not replace existing custom duties, you know, they will apply on top of it And they’re applying on each tariff is being stacked up on top of each other.

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So for example, China. You know, they already had announced a 20% tariff And when you look at the reciprocal tariff, China is at 34%. So what it means for China is it comes up to 54%.

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On top of existing custom duty. For most of these duties, they have almost no exception or exemptions. If there’s any, they’re very, very limited.

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And for at least the three first tariff, it specifically mentioned that there would be no drawback that is possible. So if you are sending Canadian products to the US, on which the fentanyl tariff will apply even though those products may be exported from the US or another country.

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There would be no possibility to get a refund for those tariffs.

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Again, when you look at this reciprocal tariff. They have excluded other list of products.

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And I call it the sectoral tariff, copper pharmaceutical, semiconductors, lumber, critical minerals.

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These are all these are all sectors that are under investigation.

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Right.

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And later on, the Trump administration can impose additional tariffs on those specific sector. So I just wanted to highlight this so people know about how those tariffs integrate to each other.

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And then we can move on to move on for the next part.

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Absolutely. Good call out.

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So what does it all mean, right? And I think for me, I know, Stefan, I’ll turn it back to you in a second here, but the first thing that I think all of our clients, anybody listening to this call should be doing Make sure you understand your current cash flow and have an accurate forecast because this is going to be a direct hit to your sales, to your cost. If you’re importing, exporting, there will be an impact to probably most aspects of your business from your suppliers, from your customers.

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And so having that accurate cash flow, that accurate budget with different scenarios in there to say, what happens if I lose 5% of my sales? What happens if my costs go up by 15%? What happens if I’m going to have a supply chain disruption and it’s going to, you know.

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Impact my delivery timelines there, understanding what that looks like is the starting point for everything that we’re going to talk about today. Because if you don’t know where you are today, it’s hard to map out where you need to go into the future.

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Then once you do that, everything that Stefan just talked about around what’s going to impact which products and where they come from, the importer of record, et cetera, every client and every company should be able to go through that budget and understand what’s going to happen line by line based on this tariff impact, it could be a decrease in sales, could be an increase in input costs, anything in between. And so just some things to think about as you go through that exercise and start to quantify the impact to your bottom line.

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Is around, you know, as it relates to the US, what percentage of your revenue comes from down there?

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How price sensitive are your customers if you needed to pass through price increases?

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How reliant are you on those price sensitive customers? Could your customers easily or your clients easily switch to a domestic or a local producer to offset some of these impacts and look at your contracts, which I know Stefan is going to talk about, but to understand what is your ability to adjust any of this as you go through that analysis.

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Then on the cost side of things, what percentage of your direct or indirect costs are going to be impacted by tariffs? Again, look at what’s impacted. How is that going to feed through to your bottom line and to your ultimately your cash flows?

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Do your contracts again, allow for pricing adjustment. And how confident are you? And this is one, again, I’ll just sort of say the term and Stefan will talk about in a second.

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But how confident are you to execute some sort of duty drawback program? There’s a lot of things that are exempt, but if you’re not taking advantage of what you can today, maybe you’re missing out on an opportunity.

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But to get more into the weeds, Defend, why don’t you go through some of these short-term initiatives, strategies, tactics that they can do to act today on what tariffs look like?

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So the first one I would say is to get your custom compliance in order.

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Many businesses have been operating for years, if not decades under a free trade agreement or with very low custom duties.

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So let’s say custom compliance was not necessarily one of the main priorities or focus of business owners. So as a first step, I would recommend that you know you review and validate the classification code the country of origin, the value that you are using for custom clearance.

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And there may be opportunities for improvement and optimization. Again, you should document and support your custom filings and identify areas of risk now that you have those massive tariffs in place.

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I would expect that audits will be on the rise. So in case you’re being audited by US Custom, you want to make sure that you have all your certificate of origin in place.

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If you’re having intercompany transaction, you want to make sure that you have proper transfer pricing.

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Analysis and documentation in place to support the value of the goods being imported in the US and that such value is being aligned with the US custom legislation.

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The second point would be to review your current agreements and terms and conditions with your suppliers and clients to determine who is liable to pay the duty.

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The tariff. As I mentioned before, generally the import of record is the person responsible to pay the tariff upon amputation.

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So Anton Importer of record is usually the buyer in a country of importation that acts as the importer record.

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Then look at your income terms that you are using for international sales agreement. For most of these include terms the the buyer is responsible for addressing custom clearance and paying custom duties at the border.

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But there’s one in Quatern in particular, DDP, which is deliberate Duty Paid, which is that the seller will have the responsibility and will assume any custom duties until applicable at the border.

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So it would be important to review your current agreement with your clients and supplier.

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To determine who must assume the tariff And whether there are any contractual clauses that will allow such costs to be passed on or shared between the parties.

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So this is something where you should seek legal advice with your lawyers and go through your agreements.

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And considering price adjustment or cost sharing clauses, indemnification if something happened or collaboration between both parties to minimize the impact of tariff.

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And potential relief. So talking about potential relief, that’s the third items.

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I mentioned before that there was very little limited exceptions duty drawback on the US side, but Canada, when they’re implemented their retaliation tariff.

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There are exceptions. So you must make sure that if whether or not they apply to you.

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Finance Canada has announced that duties, relief and duty drawback programs, they’re still available even for the retaliation tariff and there’s also a possibility of a remission order applies very in exceptional circumstances but Perhaps you may still be at least consider whether or not you would be eligible for the remission order.

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The last one is monitor the assistance and tax measure from the federal and provincial governments.

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There’s a few that have been announced. Much more will come.

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So make sure that you follow up. And determine whether it could be applicable for you. As an example, on March 21st, 2025, federal government announced that the CRA will defer GSTHSU remittances and corporate income tax payment from April 2nd to June 3rd.

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Sorry 30th and it will waive all the payments due for that period.

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And there’s all the programs that have been put in place, Export Development Canada has launched a new trade program that will deploy five billions over the next two years.

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To provide financing and insurance solution to help exporters to reach new markets.

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There’s a can export program that is now available for a new fiscal year.

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As I mentioned before, Carney mentioned that there would be a 2 billion funds for the automobile industries.

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And then it will be the upcoming election and the budget at the federal level, which will likely bring more assistance or tax relief. Same thing for ontario When you look at the Quebec last budget, there was a few announcements being made and financial assistance being

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Provided to customer. So monitor those systems and tax measures because they may be helpful for you on the short, medium, or long term.

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Exactly.

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And they’re probably going to change and evolve too as this entire situation continues to roll out and we actually start to see the impact of what’s going to happen. I think this is just the starting point and some of that’s going to evolve and shift as either new things develop, maybe things are dropped.

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So it’s one of those to stay on top of for everybody.

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We’re waiting for Mark RNA to announce, I mean, reciprocal tariff was announced yesterday. So the tariff on aluminum steel and automobile are staying the current.

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Kearney announced that they would, you know, there will be countermeasure, but nothing had been announced so far.

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And then again, the USMCA will be renegotiated in 2026 so I mean, it’s evolving and it could change and we’ve seen it. It’s going back and forth and uh so And we’ll evolve, that’s for sure.

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Well, and I think that that raises a good point, right? That everybody, we’re focused on tariffs. We’re focused on what’s happening. You know, we just went through that there’s a bunch of sort of government supports for businesses that are impacted by this.

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But it’s also a good time to maybe call out. Don’t forget just some good general business practices as we go through this.

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So just as I started this by saying, you know, companies need to monitor and understand their cash flow and try to maximize that.

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You’re not doing that in a vacuum. Everybody’s trying to do that. So don’t forget about how can you optimize your AR to accelerate those inflows coming in. So whether it’s through clear credit policies in your contracts, maybe you’re incentivizing early payments, some sort of automated invoicing and receivables.

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Those are things that are tariff agnostic. That’s just, you know, you always want to bring cash into the bank And on the other side of things, from a payables perspective, you don’t want to impact your relationships by stringing out suppliers or stringing them along and not paying them because they have the same cash flow issues, maybe worse, maybe better. You don’t know, but you want to aim for favorable terms to stretch that as much as possible.

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If you can and have the ability, leverage some of those early payment discounts if they’re available so that you’re paying less at the end. And then if required, but it should be a last resort, that’s where you can start to work to prioritize payments, but always keep good communication because These relationships, as most people on the call or maybe everybody would recognize, are really what makes the business go around is relationship, not just the revenue. So you don’t want to destroy any relationships as you’re all trying to navigate this time similarly.

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And then, you know, control your expenses, monitor your inventory level, create cash reserves.

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Again, all general business practices that not tied to tariffs, but maybe this is the time to take a step and look at it and say, is there a way that we can do this better?

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So those are all things that you can do today. Immediate actions, you can jump into it. Some of it’s fluid, like we said. Some of it’s sort of announced. Programs will continue to unfold.

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But then what can you do tomorrow or next week or some of the short-term planning there? So we talk about being able to pass along costs or price increases But for every single one of these, there needs to be a bit of a plan. You don’t want to get into knee-jerk reactions as you go through this.

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And so if I break it up from a revenue and a cost perspective, looking at your increased input costs and what that means from your revenue perspective, maybe you do want to pass along the cost to your customer. That is absolutely an option. You should plan around that. Make sure that you have the right communication strategy.

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However, make sure that you also at least think or acknowledge some of the other options. Maybe you have a high margin product. Maybe you have price sensitive customers. Maybe those two things don’t go together.

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But is there a world where you absorb the increased costs that you’re bearing just to maintain that so you can say we’re not changing prices? We as a business are absorbing this?

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Maybe you try to change your pricing model. So we’ve seen this with a bunch of clients outside of a tariff situation where maybe you have tiered pricing. So a lower price per unit for volume purchases versus higher price for small volume purchases.

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Maybe of a dynamic pricing model, much more difficult to implement there. Or maybe you just fundamentally rechange. So we’ve had clients before that sort of price everything ad hoc or bespoke But now we’re moving to a more bundled tiered model where you’re not paying or not paying for every individual change to a product, but it’s actually grouped together into buckets and in the wash, they’ve done the analysis and it sort of shakes out so that they’re not actually hitting their margin or impacting it.

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A lot of our clients are also doing constant price testing to see what the market will bear versus set it and forget it.

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So I think for anything that you’re considering around your pricing, make sure that you think it through, do the analysis.

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Understand your customer base and what they’re willing or able to do and make sure that you have a proper plan around so that a customer is not just hit with a new invoice.

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That’s 20% higher, 25% higher than they expected. And then you say, I had tariffs. That’s probably not good for your long-term relationship.

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The other side of revenue is really around diversification options. And so there’s two ways to think about this. One’s much more long term, which we’ll talk about in a second.

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But the other is short term. So find new markets and customers for your existing product base. This isn’t going out and redeveloping or redesigning the wheel. But if you’re reliant on two, three, five different customers and you know there are others or clients that are out there, maybe now is the time to go and try to diversify that away. And maybe they’re not located in a tariff impacted jurisdiction.

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You can also try to diversify your product offering. So if you have a seasonal business or you have sort of one flat price point or consistent margin profile, maybe now is the time that you can easily find or simply find something else to add to the mix, maybe even thinking about it for a while, and maybe you have it almost to the 90 yard or the finish line.

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And then you pull the trigger to do this. We’re not looking for a fundamental rejig of your strategy at this point because now is not the time to do it in the next few weeks.

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But if there are ways that you can readjust your sales team, your product team, your manufacturing to drive some of those new revenue opportunities around the edge.

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It would be something to consider. On your cost side and on your supplier, one that we hear oftentimes and we support is, you know, make sure you identify and qualify alternative suppliers.

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So who else could supply your business? There’s free sources out there. There’s paid sources out there to try to find these domestic sources or international. Both are generally available with the right search tools.

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And then try to figure out, is there a way that you can circumvent or get around paying these tariff impacted products?

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If you’re manufacturing overseas and now you’re impacted, make sure that you assess a near shoring. So bringing it a bit closer to home or reshoring, so bringing it back domestically or down in the US, which again, we’ll talk about in a second there, option with a proper cost benefit analysis.

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What’s the unit cost today? What’s it if you nearshorted or re-shorted? What is the tariff impact in those different options?

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What sort of the logistical complexity and what’s their total landed cost? So just go through the simple framework to think through all of these options. It’s a mountain of things that you need to think about. Don’t get me wrong.

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But going through the analysis, make sure you don’t make a misstep that you either have to unwind later or maybe it negatively impacts you because you didn’t think through all of the implications.

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And then as Stefan was saying, you know, contract terms and renegotiation, now is a time where you could actually try to strengthen those supplier relationships and build strategic partnerships for the long run.

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You’re not dealing with this tariff situation by yourself. Everybody is. Everyone’s trying to find similar solutions.

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So maybe it’s a time to open that strategic dialogue with your suppliers, with your customers and say, how do we navigate this together? How can we partner together so that we’re sharing the burden of this and we’re not looking at this as a zero sum game where I win and you lose?

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And then as Stefan said, monitor trade and tariff policy developments, create scenarios for different things as you hear the whispers through the wind around what could be coming or you see some of the posturing or actions coming down the road.

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Do you know what your response is going to be? In the news in the past couple of days, especially last night.

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One of the common refrains that I kept reading was, we didn’t think it was going to be this bad or we were surprised by how significant these tariffs were. Maybe it was above most people’s worst case scenario But my question to a lot were, well, what was your worst case scenario and did you have a worst case scenario? Thinking through those scenarios and now that we know the breadth and scope of what’s possible.

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Going even worse than what you were initially planning for. It’s not a bad thing to do to make sure that you’re prepared because if you’re not aware of it, how do you plan for it?

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And then there’s other options to consider. And it’s not my expertise, but Safem, from a tax perspective.

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What are some things that our clients are considering or we’re talking about with them?

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Well, as a short-term planning, I mean, you should Please review your current structure and the flow of your supply chain in respect of the US market and how you’re making sales into the US and then assess with your tax advisor, if there are ways to

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Minimize the impact of the tariff. As an example, using transfer pricing could be an example. It could be one of the tools that may provide a better outcome and optimize your tax and tariff efficiency.

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Yeah.

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But again, it’s very case by case. Look at your structure, look at the way you are doing business in the US, your supply chain and then trying to figure out if there’s ways to change a structure and get a better result at the end.

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So with that, before we move on to the final section of sort of today.

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We want to run just another quick poll here to say, you know, what actions are you considering or have you considered or have you implemented in response to tariffs?

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And so the options that are on the screen there, they’ll pop up in a second. So we just want you to click Any or all that apply because we’re interested to know, and then we’ll share sort of some of the initial results with people. And again, it’ll be sent out after the session here. So you can see sort of the full results.

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Just a reminder as well as you’re doing this, that if you did have questions, you could drop them into the Q&A chat.

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For the team there, English or French. We will try to get to as many as possible.

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So a few more seconds on the poll. And then I see some questions starting to pop in. So we’ll get to those.

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Shortly there.

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All right. Let’s bring down the pole. So what are we people doing?

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I don’t think everybody can see this. I’ll just run through the number one that we saw from people was adjust prices.

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Find cost savings renegotiate or find new suppliers very few people are sort of looking at their payables or AR process. A couple in the other category.

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Some diversifying revenue and then, you know, probably about 20% looking at near shoring or reshoring options so Again, not surprising with that. I think those are generally what we hear. And really the point today was to say.

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Here’s other things. So if you haven’t thought about some of those ones that maybe were lower on the list there, just look at your business and see if there’s something that you can do.

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So I’ll quickly summarize short-term actions. And then, Stefan, I think there’s a French question in the chat, so I’ll let you have a chance to read that.

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But to summarize sort of short-term action. So understand your cash flow. Number one, do it immediately, understand the impact.

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Of tariffs and understand your scenarios. As Stefan went through, action those immediate steps. So get your customs compliance in order, review your agreements, understand your obligations, understand your customer and supplier obligations, determine who’s liable to pay.

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Explore those relief measures, whether it’s federal, provincial governments, any sort of NGO and other government programs there, and continue to review and monitor the tax measures and assistance from all of those different bodies as you go through.

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Don’t forget your basics around your AR, AP, your expenses and inventory level. Try to create a cash reserve because we are, what, three months into this current administration Roughly, we have the better part of four years still left. So there’s a lot more turbulence that can come. So really look at your business fundamentals.

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And then in the medium term, if you’re going to adjust your supplier relationships, your pricing strategy, your customer relationships, if you’re going to look at reshoring or nearshoring your operations.

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Our one piece of advice we can’t emphasize enough is similar to the tax structuring. Make sure you plan, get the proper advice, understand the implications of what you’re going to do.

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And then in case it wasn’t apparent, just to reemphasize the other side of what we’re saying, don’t do.

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Don’t run with a gut decision at this point. Put in the work, put in the effort. It will pay off.

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Don’t become a firefighter and deal only with the immediate. It’s going to be exhausting, but make sure you find time and carve it out for that more long-term plan that reflects these uncertainties and ongoing uncertainty.

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And don’t mix up what’s an immediate action today with your long-term strategy. So don’t make a decision that’s going to cost you 18 months and who knows how much money that 18 months from now might be unnecessary or irrelevant.

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Again, that comes back to the planning comment. Stefan, questions?

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Usmca.

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De rigés. Normal mass, transformée substantial.

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Et chances de la. Or Canada knock a tariff for it?

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The USMCA on the Rep Partrillaleard MCA.

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There’s a few other questions here, and I think they’re in your wheelhouse, so maybe I’ll just throw it out there. If products are currently under applying for a 25% duty drawback for a Chinese product for a US distributor.

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Will 25% still be available for duty drawback?

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So it’s looking i think at the Today versus yesterday versus tomorrow.

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I’m a Chinese product from a US distributor currently.

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Oh, okay. That’s a good question. And there’s different tariffs that the US have imposed.

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So you have the additional tariff on China. I haven’t looked at the executive order for the time from China. If you look at the other specific tariff on the Canadian products, there were no duty drawback. So I’m not sure if that applies to

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China product as well. For the reciprocal tariff so the uh 34% tariff on China. There was no mention in the executive orders about Duty drawback. So my assumption is that it’s still available and if the product is simply Transiting through the US to Canada than for those reciprocal tariffs

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There should be a hopefully a duty drawback available.

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So just in the interest of time, I know there’s more questions coming in. We’ll get through the last section of sort of what we want to chat about today, and then we’ll open it up to more questions. So please keep populating in the Q&A there.

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We’ll keep looking at them and answer a few more. In terms of the final part of this around long-term planning, so where do we go from here? So we’ve talked about what can you do immediately. We’ve talked about things that’ll impact your business in the near to short term. So, you know, the next

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6, 12, 18 months But what do you do for your long-term plan here, knowing that most of the people on the webinar today work for or come from family businesses, are entrepreneurs or executives that work within?

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I think to reiterate some points that some of our political leaders in Canada have made, our relationship with the United States has fundamentally changed and it’s entered our political discourse right now. So we have, you know, Mark Carney as a candidate saying that, you know, our old relationship with the US

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Is over. We need to change. We have Apolyv going, thinking that the relationship can be salvaged and returned to new.

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But also willing to pursue alternative trade barriers or partners if the tariffs remain in place and, you know.

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The midterms are really being viewed as the chance to reset relationships based on what happens in the election.

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I would say, you know, from my perspective. We’ve always had an over-reliance risk on the US, but because it was such a symbiotic relationship, we either ignored it.

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We didn’t manage it similar to what Stefan was saying around getting the customs compliance in order. It wasn’t a thought before.

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Now, though, we have to recognize the double-edged sword for what it was. We had a lucrative market with favorable currency arbitrage.

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You know, we didn’t really have an incentive to find or develop alternative markets, even though Canada has something like 50 other free trade agreements that we rarely leverage.

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It was a large financial market. So for those who are looking to monetize or sell their businesses.

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There’s always a big market in the US to buy these, whether it’s from a financial sponsor like a private equity or one of the large strategics could be public or private.

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And so a lot of times we see businesses that whether they realized it or not are almost designed for a US sale. And because we know that that market is going to be there. And so we’ve underinvested in some innovation. We’ve lost talent to the US with a brain drain.

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And so how can we use this from a long-term perspective once we get through this moment of pain?

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To reinvigorate our economy, strengthen our businesses, increase our resiliency, and honestly create a more vibrant middle market private sector in Canada. So last poll question, and we’ll keep it up really quick because we are coming up to time there.

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How have tariffs impacted your long-term strategic view for your organization?

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There’s no impact. You need to reevaluate. We’ll somewhat change our strategy. We’ll really change our strategy.

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Or we don’t know. We don’t even know where to start.

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So just select whichever one comes to mind. We’ll give it 10, 15 seconds here for people to respond.

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Another five, four. Three, two.

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All right, let’s take it down and see what some of the results are.

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We need to reevaluate or will somewhat change some unsures Some no impact, you know, good for you guys. And then minority that say we need to significantly change.

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So thank you for that. We’ll send again the responses out afterwards.

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So when we do strategic planning, when I work with clients, when our firm works with clients, it always starts with what’s your long-term objectives.

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So right now, tariffs are your moment in time point of pain. It’s going to fundamentally change a lot of trade relationships in the world, especially if it’s prolonged or they don’t fall away and we incur a lot of economic harm.

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And so any plan that you develop needs to be rooted to not only your corporate objectives, so what’s your revenue next year, what’s your profit, EBITDA, whatever your metrics are.

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But also what your shareholder objectives are. So as an owner, as an entrepreneur, if you’re an executive on behalf of your shareholders.

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What are their goals? Do they want to monetize? Do they want to grow? Are they looking to stabilize because life is good right now?

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And then based on that, that’s where you start the development of your long-term strategy. So if tariffs have negatively impacted you, how are you going to start to mitigate that? If they’ve positively impacted you, how can you potentially leverage that? We’re seeing buy Canadian push.

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Is that an opportunity for your businesses? But regardless of what your goals are, understanding what the business needs to do to achieve those and the gap between today’s capabilities and tomorrow is again the starting point. And I’ll take a moment here to talk about if you have a significant US client base.

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There is a gut reaction that I hear all the time that we just need to move to the US. That could be move a salesperson, could be a tax structuring. It could be fundamentally move more material operations. The one thing that I would implore people on this call today to really remember is that if you’re going to transition anything down to the United States, it’s a fundamentally different world you’re entering, whether it’s one person or a hundred. So make sure that you do the proper diligence around all of that

287
00:50:12.298 –> 00:50:26.298
Whether it’s a new business plan, a market entry assessment, whatever that happens to be, because now you’re going to have to deal with a different commercial model, a different support structure from if you’ve never had multi-site operations before. There’s HR and labor and management requirements.

288
00:50:26.298 –> 00:50:38.298
There’s a bunch of tax implications from corporate personal sales tax, understanding what that looks like in the remittances therein, your supply chain may be different, and then who knows about the regulatory environment.

289
00:50:38.298 –> 00:50:56.298
That would be product dependent in wherever you are. And so if you’re going to make this decision or you think you might make this decision of what can I relocate to the US, make sure that you get the proper advice around the table to say, am I thinking about this from all the angles or am I only taking a singular view? And should I maybe ask a few more questions?

290
00:50:56.298 –> 00:51:03.298
Also, start to ask what’s the market potential for some of your other products, whether it’s domestic or international?

291
00:51:03.298 –> 00:51:16.298
So does lower domestic trade barriers create an opportunity? Do these other free trade agreements Although admittedly it’s more difficult than sending something to the US, is there an opportunity to go overseas in a different way than you have before?

292
00:51:16.298 –> 00:51:26.298
Or can you change your business model to offer new products, new services, new revenue models, et cetera? So you’re not actually changing your markets or your business.

293
00:51:26.298 –> 00:51:37.298
But you’re monetizing in a different way. And then if you do make the decision to go overseas or to go into a new market, whether that’s end customers, products, services, et cetera, whatever.

294
00:51:37.298 –> 00:51:48.298
Make sure that you’ve taken a step back again to say, what complexity does this introduce to my business? What are the new risks that I have to incur? And do I have the capabilities to actually execute on this strategy?

295
00:51:48.298 –> 00:52:04.298
So the easy example that I often go to is, you know, you can enter a new market organically, build it yourself You could buy a company to enter a new market. You could form a joint venture or a partnership with somebody. Those are all valid tactics to enter a new market, but they’re all very different risk profiles.

296
00:52:04.298 –> 00:52:14.298
And depending on where you are as a company, you’re going to have to handle that differently. If you’re doing Greenfield, it’s going to be expensive. It might be slower than you’re expecting, and you really have to build from the ground up.

297
00:52:14.298 –> 00:52:24.298
But you’ll retain your corporate culture, your DNA, the special sauce that makes you work. You don’t need to worry about bringing in, I’ll say outsiders or a different party to the table to work with them.

298
00:52:24.298 –> 00:52:34.298
M&a much quicker. You can write a check by a company, but then the risk with that is that you have to integrate it. You have cultural integration, financial integration systems.

299
00:52:34.298 –> 00:52:42.298
So when you’re doing your diligence in the deal, make sure that you understand all of that, not just looking at, okay, well, now I’ll have a local presence. Now I’ll have, you know.

300
00:52:42.298 –> 00:52:47.298
X numbers of EBITDA added to my bottom line. Have I thought through all of this?

301
00:52:47.298 –> 00:52:56.298
And probably the most complex of all of them is the hybrid, which is a joint venture or a partnership where it can be relatively quick, although you need to negotiate.

302
00:52:56.298 –> 00:53:08.298
It’s very complex though to work in a partnership structure. If you have two parties that have an equal voice, 50-50 joint venture, it’s very complex. You need to have the proper governance in place, the proper incentives and penalties in place.

303
00:53:08.298 –> 00:53:13.298
And it does require a heightened level of trust. And shared risk and reward.

304
00:53:13.298 –> 00:53:25.298
All of those are valid, but if you’re going to expand elsewhere, make sure that you take the time to think through what does it mean for your company, especially for people if you’ve never done an M&A deal before, if you’ve never formed a joint venture.

305
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Understanding the implications so you don’t wake up one day and go, what have I gotten myself into will be absolutely critical.

306
00:53:33.298 –> 00:53:42.298
And then, you know, other than just sort of expanding your businesses in terms of your core business, adjacent business, or maybe you want to transform it into something new.

307
00:53:42.298 –> 00:53:47.298
You know, I go back to look at your business today and can you do things better? Maybe a tariff increase your cost base.

308
00:53:47.298 –> 00:53:53.298
But have you looked at digitizing elements of your business, automating elements of your business.

309
00:53:53.298 –> 00:54:06.298
Have you looked at your business processes to say, you know, are we doing things in an efficient manner or does it still require X number of people when it could be automated in a workflow with some sort of technology solution?

310
00:54:06.298 –> 00:54:21.298
And that journey is not easy. It’s stepwise. First, you need to digitize, then you digitalize to actually say, how do I use this information And then you can pursue a full digital transformation and process redesign to say, how do we embed technology into everything that we do?

311
00:54:21.298 –> 00:54:26.298
But looking for those quick wins to preserve your margin, make your business run more efficiently, et cetera.

312
00:54:26.298 –> 00:54:35.298
Those will help in the long term. And so maybe now is the time that you should start looking at that and figure out how do you incorporate it into your business.

313
00:54:35.298 –> 00:54:40.298
With that, though, we have some time left and so I want to turn it to some of the questions that are in the chat.

314
00:54:40.298 –> 00:54:44.298
So then is there any that you want to call out?

315
00:54:44.298 –> 00:55:06.298
I’ll go in order. First one is from Jack. What if I purchase a US part aluminum and also parts from mexico the part will be taxed 25% for aluminum plus 25% for Mexico products Then I sell my finished products to U.S.

316
00:55:06.298 –> 00:55:10.298
And we’ll add another I’m not sure if I get the whole thing.

317
00:55:10.298 –> 00:55:13.298
So I think it’s saying, do I need to pay 25% for each step of that process or does it get blended or merged together in some way?

318
00:55:13.298 –> 00:55:19.298
Yeah.

319
00:55:19.298 –> 00:55:29.298
Yeah, so if you are manufacturing in Canada, importing parts that has aluminum from the US.

320
00:55:29.298 –> 00:55:38.298
Yes, you will likely pay the 25%. Tariff Canada is imposing on aluminum or steel products from the US.

321
00:55:38.298 –> 00:55:53.298
But if you’re manufacturing those parts in Canada and ship it back to the US, I believe that you may be eligible to get a a duty drawback from that surtax imposed by Canada.

322
00:55:53.298 –> 00:55:58.298
And the US, while they will impose 25% on articles that are made of steel and aluminum back in the US.

323
00:55:58.298 –> 00:56:09.298
But if the original LED aluminum came from the US, then it should not be subject to the 25% on the US side.

324
00:56:09.298 –> 00:56:17.298
Then from Guillaume, my company distributes products that are not produced in Canada. Everything is coming from the US and offshore.

325
00:56:17.298 –> 00:56:35.298
What are my chances to apply for tax exclusion? Remission well if you are importing goods into Canada that is coming from, you know, not from the US, then it’s the regular custom duties that will apply.

326
00:56:35.298 –> 00:56:55.298
Even if you are importing US products, remember canada is not a broad 25% tariff. It’s very specific. You have specific codes, specific products on which The tariff applies so i would recommend that you check those classification code to see if whatever you’re importing from the US

327
00:56:55.298 –> 00:57:01.298
Could be subject to the 25%. Retaliation tariff from Canada.

328
00:57:01.298 –> 00:57:13.298
And it doesn’t mean that if you are buying from a US distributor that the product is originating from the US. It might come from another country. So the country of origin is very important.

329
00:57:13.298 –> 00:57:28.298
So now I see one more French question, a second from the bottom there. Maybe we’ll take that. And then just so other people know, if we didn’t get to your questions today, we have them documented. And so we will reach out afterwards with an answer.

330
00:57:28.298 –> 00:57:33.298
For your question. So we won’t ignore it. It’ll just be after and offline from the webinar.

331
00:57:33.298 –> 00:58:03.298
Du Canada. If it manages the impacts on Moise important demand touristic.

332
00:58:06.298 –> 00:58:15.298
Snort a basket.

333
00:58:15.298 –> 00:58:45.298
Liturgy machine. Pal administración trump

334
00:58:54.298 –> 00:59:07.298
So with that, thank you, everybody. We’ve reached the end of our time today. I know it was a very quick hour. There’s probably another multiple hours we could spend just discussing it amongst ourselves.

335
00:59:07.298 –> 00:59:20.298
But thank you so much for tuning in. At Richter, we recognize that this is a challenging time for everybody. And there’s, as we’ve said, more uncertainty coming ahead. And so outside of some of the tactical things that we’ve discussed today, admittedly a very high level.

336
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We remind you that we take our relationships very seriously as well. And as a firm, we’re committed to helping. We’re here to help throughout this time. And so please don’t hesitate to reach out to any one of the partners or staff at Richter if you have questions or think we can help.

337
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We’re always here to take the time, understand the situation and bring the right people to the table to help you through whatever happens to be on your mind at the time.

338
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So once again, on behalf of myself, Stefan, our partners, and really our entire firm.

339
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Thank you for being with us today. And we’re going to be doing more of these as the situation continues to unfold.

340
00:59:54.298 –> 01:00:06.298
So please stay tuned. We’ll be sending out invites, posting on LinkedIn. And like I said, we’ll send out a deck afterwards with some of the content talked about today. We’ll follow up with people for questions as well as the poll results.

341
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Thank you and look forward to seeing you all here next time.

342
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Take care