SERIES OF ARTICLES
In order to better support our companies, we are launching a series of expert articles aimed at supporting organizations and their HR function to position themselves strategically in the current context of uncertainty, and to anticipate challenges to optimize their performance. Several topics will only be briefly covered in the next few lines, but we will come back to them in more detail in our next articles. The members of the Solertia team – HR Center of Expertise, are mobilized to support you in this period of instability.
We aim to provide you with high-quality information, along with practical tools and strategies. Some industries may be more affected than others, and the impact of HR varies across different sectors.
This article is intended for entrepreneurs, executives and the HR function of Canadian companies whose business strategy is affected by the threat of U.S. tariffs.
Context and Possible Scenarios
In recent weeks, the Trump administration has been very vocal about the tariffs that will potentially be applicable to its foreign business partners. These tariffs could have a major impact on the Canadian economy as well as the labour market. Several scenarios are possible:
- Tariffs of 60% on Chinese imports and 10% on the rest of the world, as originally proposed;
- Tariffs for North American partners, 25% for Canada and Mexico and 10% for China;
- Application of partial tariffs, targeting specific sectors or countries;
- Variable duration and magnitude of the rates can be temporary or extend over the long term with higher or lower rates.
Faced with this threat, which has significant potential impacts on the HR function of companies, resilient organizations have a duty to prepare and adapt their business strategy. An agile and robust HR function enables organizations to deliver on their ever-evolving strategy.
Keeping a Global Perspective: What You Need to Know About Trump
The President of the United States is sensitive to the success of companies, the stock markets, inflation, the economy, the business community around him as well as the individuals who support him. However, the tariffs mentioned would have negative repercussions on all these aspects and stakeholders.
Moreover, Trump is known for his extreme methods of negotiation. This quote from his own book The Art of the Deal sums up his approach well:
In light of this quote, Trump’s words potentially presuppose that the tariffs are being used to achieve other strategic goals for the United States. For example, the military spending of other states, access to foreign markets for American corporations, border security, etc. If countries work together on these levels, what will happen to tariffs?
While remaining cautious, this environment reduces the chances of aggressive prices spread over a long period. It is equally prudent in this context to avoid overreacting to this situation. No doubt we will continue to hear a lot of noise about this, which will have consequences in many ways. Every crisis has its opportunity!
Canadian Organizations Adapt Their Business Strategies
Because of the U.S. President’s announcements, organizations are forced to reevaluate their business strategy. Here are some simplified examples of potential broader strategies for organizations3 :
- Product modification;
- Diversification and development of new markets;
- Supply chain optimization and diversification;
- Partial production directly in the United States;
- Various partnerships with U.S. companies;
- Reduced costs to absorb tariffs;
- Increased operational efficiency (AI, digital transformation, lean management, robotization, automation, etc.);
- Customs and transport management;
- Etc.
Several repercussions are also likely on the HR function and on employees:
- Recruitment of new staff specialized in the improved business strategy (functions that were not already in the organization);
- Emerging training needs and professional reskilling;
- Engagement programs (read our article : A Distinctive and Coherent Total Rewards Strategy);
- Employees working abroad.
In Conclusion
This situation is new to everyone and it is changing rapidly. Stay tuned for our next articles on the subject.
Do you have any questions following your reading? Would you like us to delve deeper into a particular topic? If you would like to discuss this with one of our specialists, please contact:
Frédérick Blanchette, President, Managing Partner: 1 844 220-8008, Ext. 206 • fblanchette@solertia.ca
Stéphanie Saumur, Strategic Manager: 1 844 220-8008, Ext. 489 • ssaumur@solertia.ca
1. Book The art of the deal, Donald J. Trump et Tony Schwartz.
2. Book The art of the deal, Donald J. Trump et Tony Schwartz.
3. This section will be explored in more detail in our next article, depending on how the situation evolves.
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