Ahead of the U.S. presidential inauguration, local tech leaders gathered for a briefing from U.S. government and trade experts on the potential impact of tariffs under a Trump presidency. They were advised that businesses can’t afford to take a passive stance.
The town hall, hosted by Communitech on January 17, 2025, brought together 40 local startups and scale-ups, along with community partners, all with a shared concern over the uncertainty and potential impacts of broad-based tariffs on Canadian goods and services.
Expert insights from a top government relations firm in Washington, DC
The town hall featured expert insights from representatives of Capitol Counsel LLC, one of Washington, DC’s leading government relations firms. With expertise in cross-border trade and government and technology, they offered guidance and answered questions. The discussion covered the complex dynamics of U.S.-Canada trade, the political landscape around tariffs and strategies businesses can use to minimize risks.
Despite media coverage and the tariffs implemented under the previous Trump administration, there’s still a lot of uncertainty about how and when tariffs might be imposed on Canada. During his campaign, Trump advocated for broad tariffs, mainly targeting Canada and Mexico, with rates that could go as high as 25 per cent. These proposals have raised concerns about inflation, economic damage and potential political fallout.
How tariffs could be implemented
The briefing also covered the possible ways tariffs could be implemented, including:
- Section 301 of the Trade Act of 1974,
- Section 232 of the Trade Expansion Act
- The International Emergency Economic Powers Act (IEEPA)
Attendees also got an update on how Congress and state governors are viewing the situation. In anticipation of these tariffs, representatives from Capitol Counsel shared that they’ve been working closely with members of Congress, senators and governors to stress the importance of cross-border trade and its economic benefits. They mentioned that their efforts have uncovered some hesitation among House Republicans to include tariffs in a reconciliation bill, mainly because of the political risks involved, which suggests they’re making some progress in pushing back against the proposal.
Under IEEPA, tariffs could be imposed with little notice, skipping the usual public comment and consultation processes. This creates uncertainty for businesses, which might struggle to adjust if tariffs are suddenly put in place.
Political landscape & role of advocacy
The discussion highlighted how Trump’s trade policy often seems to be driven by unpredictable motivations. For instance, past justifications for tariffs have ranged from trade deficits to issues like NATO contributions or immigration. Attendees pointed out how this inconsistency makes it tough for Canada to address specific concerns, as the shifting reasons behind the tariffs make it nearly impossible to predict or prevent them. The takeaway? Businesses need to focus more on political advocacy than trying to meet changing, hypothetical conditions.
The best defense
So, what's the best way to defend against potential tariffs? Proactive engagement, according to Capitol Counsel representatives. During the town hall, business leaders were encouraged to take action by tapping into their U.S. networks, including suppliers, dealers and trade associations, to highlight the risks tariffs pose to jobs and the economy.
They were also encouraged to reach out directly to members of Congress, governors and other key decision-makers to focus on how tariffs could impact U.S. constituents. Canadian companies were reassured that their voices do matter in U.S. policy discussions, especially given the strong ties in cross-border trade.
Understanding tariff impacts across industries
Sector-specific concerns were also raised during the discussion. Attendees from industries like packaging and software asked how tariffs might impact digital goods, services and certain products. Capitol Counsel explained that while tariffs have typically focused on physical goods, the broad authority under IEEPA means there's always a possibility, though unlikely, that digital services could be targeted. Founders were also advised to keep an eye on trade investigations through resources like the U.S. International Trade Commission so they’re not blindsided by new duties.
With Trump’s tariff strategy being so unpredictable, businesses need to stay informed and stay flexible, which was a point that came up during the town hall. In the past, exemptions under Section 301 and 232 were often applied retroactively, so companies should be ready to move quickly if an exemption process is introduced. Timing also plays a big role in minimizing the impact. Businesses can speed up shipments before tariffs hit or hold them off during negotiations, as experts pointed out during the session.
Timing is everything
The big takeaway for tech leaders at the town hall is simple: they can’t afford to sit on the sidelines. If tech startups want to protect what matters to them and keep up with change, they need to get involved and speak up for policies that support free trade. That way, they can stay flexible and be ready for what the future holds.