In the global trade debates, tariffs often dominate the headlines. But for many businesses, the significant cost right now arises from uncertainty.
When trade rules shift — or even appear likely to shift — companies begin adjusting long before any policy formally changes. Suppliers add risk premiums to contracts. Investment decisions slow. Firms rethink where to source components, where to manufacture, and where future growth will take place.
These realities emerged clearly during a recent closed-door roundtable convened by the Mayor Josh Morgan through the London Economic Response Team (LERT), where regional business and community leaders gathered to share how ongoing trade disruptions are affecting industries and labour markets in Southwestern Ontario ahead of the upcoming review of the Canada–United States–Mexico Agreement (CUSMA) in July 2023.
“London sits at the crossroads of North American trade — a region that builds, grows, innovates, and exports,” noted Mayor Morgan.
Ontario’s representative in Washington, David Paterson, outlined the broader policy environment surrounding the upcoming CUSMA review. While many officials in Washington support renewing the North American trade framework, the current U.S. administration continues to rely heavily on tariffs and other policy tools as negotiating leverage.
The conversation also brought together voices from across sectors and included a panel discussion with Pete Oveson of Trojan Technologies, Salim Chahbar of Trudell Healthcare Solutions, and Ethan Hickey of the Forest City Film Festival. Moderating the session, Romel Mostafa, Professor and Director of Ivey’s Lawrence National Centre for Policy and Management, framed the purpose simply: “Good policy starts with listening.”
Uncertainty carries a premium
One of the clearest messages from the forum was that trade uncertainty itself carries a price. For businesses operating within that environment, even the possibility of future trade disruptions can reshape decision-making.
Some firms reported that supplier costs have already increased between five and fifteen per cent as companies build risk premiums directly into contracts and pricing to hedge against trade shocks. In effect, uncertainty itself becomes an additional layer of cost on top of existing tariffs.
While national trade debates often focus on tariffs and market access, companies emphasized how policy shifts translate into operational pressures on the ground.
Participants emphasized that many Canadian industries rely on deeply integrated North American supply chains, where intermediate components may cross borders multiple times before reaching final customers. Even small disruptions — tariffs, customs delays, or regulatory changes — can therefore translate quickly into higher costs and logistical pressures across entire production networks.
Trade rules can shape where innovation scales
Participants also raised concerns about how border rules and regulatory changes affect the ability of smaller firms to experiment in international markets.
One example discussed was the recent removal of the de minimis exemption, which previously allowed low-value shipments that are non-CUSMA to cross borders duty-and-tariff free. For many micro-enterprises and early-stage startups, these small shipments provide a pathway for direct-to-consumer exports and market discovery. Firms use them to test pricing, gauge demand in different regions, and experiment with product positioning before committing to larger investments.
When those pathways become more restrictive or uncertain, firms may abandon cross-border experimentation altogether. In some cases, companies shift their focus toward domestic markets; in others, early-stage firms may relocate operations or incorporate in the United States to access customers and scale more quickly — slowly weakening the pipeline of future Canadian exporters.
Regional economies are already adapting
Faced with uncertainty, many firms are actively reshaping their strategies.
Some companies described expanding operations in additional international markets or diversifying supply chains to reduce reliance on a single market. Others are building redundancy into logistics networks or exploring new partnerships outside North America.
While diversification can strengthen resilience, it may also gradually weaken the tightly integrated North American production systems that have underpinned regional competitiveness for decades. Maintaining strong regional ecosystems — where firms, talent, and supporting industries cluster together — remains a key factor in sustaining local economic competitiveness.
These dynamics extend beyond manufacturing. Participants noted that creative industries are also affected by cross-border policy decisions. Recent amendments to Canada’s Broadcasting Act requiring digital streaming platforms to contribute to Canadian productions were highlighted as an example of how policy frameworks can influence where investment and production take place. For regional economies, such policies can shape the financing environment for local film and media production, supporting jobs and economic activity across a wider creative ecosystem.
From local insight to national policy
Trade agreements are negotiated at the national level, but their consequences unfold locally — across supply chains, investment decisions, and the day-to-day operations of businesses operating across borders.
The London Economic Response Team was created to capture those signals early — listening to how trade disruptions are unfolding on the ground and translating those insights into policy conversations at higher levels of government.
As policymakers prepare for the upcoming CUSMA review, the experiences shared by industry and community leaders operating on the front lines of North American supply chains offer a reminder that effective trade policy benefits from listening to how those decisions play out on the ground in communities like London.
Media coverage