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On November 4, 2025, the Government of Canada tabled Budget 2025 (the "Budget").1 The Budget proposes various funding envelopes for trade-related projects and departments and for trade development initiatives, and introduces legislative changes that will affect Canadian and international businesses.
This bulletin highlights major trade and tariff updates found in the Budget and their impacts, including on recent tariff and trade developments. For a comprehensive overview of the trade landscape to which the Budget applies, please see McMillan's prior bulletin entitled "Preparing for All Things Tariffs", released on October 22, 2025.2
Trade Context and Tariff Exposure
The Budget describes a global shift toward greater trade barriers and notes that the United States has raised its average tariff rate across all countries from 2 percent to 17 percent. Although 85 percent of Canada–U.S. trade remains tariff‑free and Canadian exports face the lowest average U.S. tariff among major U.S. trading partners at 5.4 percent,3 sectors such as steel, aluminum, softwood lumber, wood products (kitchen cabinets, flooring and furniture, in particular), automobiles, and copper continue to face high tariffs and remain highly vulnerable to trade disruption.4
The Budget confirms that the Canadian government has raised $6.7 billion in revenue from Canada's countermeasures to U.S. tariffs, of which $3 billion was subsequently remitted to Canadian businesses through initiatives such as Canada's tariff remission program for tariffs that apply on goods from the United States. The remaining $3.7 billion in net revenue is subject to fall as additional claims for remission are processed.5 The Government of Canada predicts to remit $178 million of China surtaxes in 2025-2026.6
Canadian businesses should continue to apply for remissions where appropriate to relieve the burden of tariffs, and advocate for remissions previously made. Domestic producers, including Canadian steel producers in particular, should also continue to monitor remission initiatives closely and object where appropriate.
The Budget proposes the following responses to the ongoing trade war with the United States and shifting global trade patterns.7
Sectoral Measures Available to Canadian Business to Offset Tariff Pressure
The Budget includes initiatives and funding in specific sectors to offset the pressure of high tariffs. The initiatives include:
- A Strategic Response Fund – providing $5 billion over six years to help firms offset new market‑access costs, retool production, and secure or expand into new markets. The steel industry will benefit from $1 billion of Strategic Innovation Fund support which forms part of this effort.8
- Regional Development Agencies – delivering a Regional Tariff Response Initiative with up to $1 billion over three years to support businesses in affected sectors, such as automotives, steel and aluminum, and wood products, including non‑repayable contributions where eligibility criteria are met.9
- Forestry related support measures – including up to $700 million in loan guarantees administered by the Business Development Bank of Canada ("BDC") and $500 million to renew and expand existing Natural Resources Canada ("NRCan") programs to support market and product diversification.10 The Government of Canada previously announced these measures on August 5, 2025.11 Loan guarantees and NRCan programs will provide access to funding for companies engaged in forestry operations.
Other Initiatives Where Canadian Businesses Might Find Funding
The Budget proposes several initiatives to assist Small and Medium Enterprises ("SMEs") and companies with liquidity and export financing. Canadian businesses, especially SMEs, steel producers, and businesses in the forestry sector, might find funding through:
- The Large Enterprise Tariff Loan facility offering $10 billion in capacity for firms affected by tariffs. The first loan provided $400 million to Algoma Steel, with the Province of Ontario adding $100 million on equivalent terms.12 This funding is restricted to otherwise well capitalized businesses.
- BDC's Pivot to Grow supporting SME steel enterprises. The Budget projects an accrual cost of $231 million over five years for this enhancement to address liquidity challenges among SME steel producers and processors arising from tariff exposure, price volatility, and inventory holding periods in steel supply chains.13
- Export Development Canada efforts to increase total business facilitated by $25 billion by 2030 by lowering their risk tolerance for new offerings, and to launch a $2 billion concessional trade‑finance envelope to encourage international partners to buy Canadian.14
- Global Affair Canada's ("GAC") CanExport with $19.9 million in ongoing funding which encourages Canadian SMEs to diversify their exports to markets abroad by sharing the costs of international business development activities, such as legal expenses, trade shows, and market research.15
Canadian businesses in relevant sectors, such as steel and forestry, should contact the agencies and crown corporations administering any relevant programs and access funding as appropriate.
Trade Diversification and Infrastructure
The Canadian government set a goal to double non‑U.S. exports to $600 billion over the next decade. The government identifies two key priorities to reach the target: (1) diversifying and deepening trade relationships with reliable partners and (2) building infrastructure to support trade and transportation.16Canada recognizes the Indo-Pacific region and Europe as key markets to Canada's long-term economic resilience.17
The Budget introduces funding for key trade infrastructure. The Trade Diversification Corridors Fund allocates $5.0 billion over seven years to finance port, rail, airport, and digital infrastructure that connects exporters to overseas markets. The Arctic Infrastructure Fund allocates $1.0 billion over four years for dual‑use transportation assets, including airports, seaports, all‑season roads, and highways, to open northern gateways and to support sovereignty and regional development.18
Canada Border Services Agency and Global Affairs Canada Operations
The Budget proposes significant updates to bolster border operations. These updates aim to expand trade opportunities while simultaneously increasing the Canada Border Services Agency's ("CBSA") capacity.
The Budget aims to expand trade opportunities by mandating CBSA to work with other departments to identify additional ports for container import and export designations, particularly in the Great Lakes–St. Lawrence region, such as Québec City and Hamilton, to broaden gateways and catalyze private investment.19 The Budget also proposes a Strategic Exports Office at GAC to curate a pipeline of international business opportunities, coordinate engagement across departments, and remove market‑access barriers as part of the Trade Diversification Strategy. The Office will focus on building roadmaps for senior‑level government engagement to support Canadian bids and remove obstacles to trade abroad.20 Global Affairs will see additional investment of $20 million over four years to enhance GAC's capacity to negotiate and implement trade and investment agreements and an additional $8 million over three years to support trade controls to defend the steel industry from trade diversion and global excess capacity.21
Budget 2025 also proposes $617.7 million over five years to increase CBSA's capacity to detect and intercept illicit goods and to "defend Canadian industries by enforcing import measures and bolstering trade‑remedy capacity."22 McMillan's international trade team worked with other leading international trade and investment groups at leading national firms to advocate for increased funding for CBSA's trade capacity through an open letter and communications with the federal government, and the team is pleased to see some of this funding announced in the Budget.
Legislative Amendments to the Export and Import Permits Act
The Budget proposes legislative amendments to allow the government to restrict the importation or exportation of items in response to actions of another country that harm Canada or to create more secure and reliable supply chains. The measure will expand the list of valid purposes for imposing import and export restrictions and allows for such controls to be used to address economic security concerns and supply‑chain risks, including in the context of trade disputes.23
Currently, theExport and Import Permits Actallows the Governor in Council to establish import and export control lists for purposes such as the control of arms, promoting defence, and protecting initiatives regarding natural resources, among others.24 This legislative amendment will further equip the Canadian Government in the context of trade disputes and supply chain disruptions, and Canadian and global businesses should stay abreast of any inclusion of goods on such lists in the future.
McMillan LLP's International Trade Group is the largest such group in the country. Our team is well positioned to help your business navigate shifting tariff policies and relief procedures, develop strategies to minimize tariff and supply chain disruptions, and assist with remissions and with compliance on tariff classification, origin verification and valuation for duty. We also assist in drafting submissions to government on CUSMA consultations and government engagement.
McMillan Vantage, our affiliated full-service, national public affairs firm, can also assist with government engagement on tariff mitigation strategies.
Footnotes
1 See Budget 2025 – Canada Strong (November 2025).
2 Preparing for All Things Tariffs, bis: Updates to Canada's Trade Policy Regime Ahead of 2026 CUSMA Joint Review – McMillan LLP, October 22, 2025.
3 Budget 2025, pp. 29–31, 40.
4 Budget 2025, pp. 30.
5 Budget 2025, Annex 1, p. 244.
6 Budget 2025, Annex 1, p. 271.
7 Budget 2025, pp. 50-51.
8 Budget 2025, p. 132.
9 Budget 2025, p. 133.
10 Budget 2025, p. 132.
11 Government of Canada, Measures to transform Canada's softwood lumber industry – Natural Resources Canada.
12 Budget 2025, p. 134.
13 Budget 2025, p. 134.
14 Budget 2025, pp. 139, 144.
15 Budget 2025, p. 145.
16 Budget 2025, p. 136.
17 Budget 2025, p. 140.
18 Budget 2025, p. 136-138.
19 Budget 2025, p. 137.
20 Budget 2025, p. 143.
21 Budget 2025, pp. 144, 149.
22 Budget 2025, p. 193.
23 Budget 2025, Annex 5, p. 12.
24 Export and Import Permits Act, R.S.C., 1985, c. E-19 at sections 3(1) and 5(1).
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2025
