THE STANDING SENATE COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE
EVIDENCE
OTTAWA, Wednesday, June 10, 2026
The Standing Senate Committee on Foreign Affairs and International Trade met with videoconference this day at 4:15 p.m. [ET] to examine and report on such issues as may arise from time to time relating to foreign relations and international trade generally.
Senator Peter M. Boehm (Chair) in the chair.
[Translation]
The Chair: Good afternoon, honourable senators.
My name is Peter Boehm. I am a senator from Ontario and the chair of the Standing Senate Committee on Foreign Affairs and International Trade.
I will now invite committee members to introduce themselves.
[English]
Senator Adler: Charles Adler, Manitoba.
Senator Ravalia: Welcome. Mohamed Ravalia, Newfoundland and Labrador.
Senator Ataullahjan: Salma Ataullahjan, Ontario.
Senator MacDonald: Michael MacDonald, Cape Breton, Nova Scotia.
[Translation]
Senator Gignac: Clément Gignac, senatorial division of Kennebec, in Quebec.
[English]
Senator Harder: Peter Harder, Ontario.
Senator Wilson: Duncan Wilson, British Columbia.
Senator Coyle: Mary Coyle, Antigonish, Nova Scotia.
Senator Busson: Welcome. Bev Busson, British Columbia.
[Translation]
Senator Hébert: Martine Hébert, from Quebec.
[English]
The Chair: Welcome, senators. I would like to welcome anyone who is watching us today from across the country on Senate ParlVU.
Colleagues, we are meeting today to discuss the Canada-United States-Mexico Agreement, or CUSMA, and Canada’s trade relationships with the United States and Mexico. In particular, today, we want to hear from stakeholders. That will be very important for Canadians to hear and for us to get the perspectives of our witnesses.
We have the pleasure of welcoming to the committee, from the Canadian Federation of Independent Business, Michelle Auger, Director, Trade and Marketplace Competitiveness; and Corinne Pohlmann, Executive Vice-President, Advocacy, who is joining us by video conference. And we have the pleasure of welcoming, from the Canadian Pork Council, René Roy, Chair; and Stephen Heckbert, Executive Director. Mr. Roy is joining us by video conference, and Mr. Heckbert is here with us today in the room. Welcome again.
Before we hear your opening statements and proceed to questions and answers, I would ask everyone present to please mute notifications on your devices, and please observe the best practices here in the room with respect to the microphone and the earpiece. We want to avoid any sonic incidents that may cause discomfort to our technical staff and our interpreters in particular.
We’re ready to hear your opening remarks, which will be followed by questions from senators.
Ms. Auger, you have the floor, followed by Mr. Roy.
Michelle Auger, Director, Trade and Marketplace Competitiveness, Canadian Federation of Independent Business: Good afternoon. First, we’d like to thank the committee for inviting us to appear today. The Canadian Federation of Independent Business, or CFIB, is a non-partisan, not-for-profit organization representing more than 103,000 small- and medium-sized enterprises, or SMEs, across every industry and region of Canada.
SMEs are operating in a very challenging environment, shaped by trade tensions, higher costs, labour challenges and growing regulation. Canada is also facing an entrepreneurial drought. Today, more businesses are closing than opening. Fewer owners are willing to invest, expand or encourage others to become entrepreneurs. In fact, CFIB data shows that 55% of small business owners would not recommend starting a business today.
Additionally, trade tensions between Canada and the U.S. remain a major source of uncertainty for SMEs, affecting their supply chains, increasing their input costs and downstream pricing on customers. Sectoral tariffs are particularly harmful, with aluminum and steel tariffs on both sides of the border consistently identified by SMEs as the most damaging trade measure affecting their operations.
The impacts are widespread across small businesses, regardless of the sector. Two thirds of business owners reported being affected by tariffs in some way. Also, Canada-U.S. business relationships have weakened significantly, with 75% of Canadian SMEs reporting that the trade dispute has negatively affected their relationships with their U.S. partners or clients. That is up significantly from 49% in March 2025.
At the same time, only 40% of SMEs now view the U.S. as a reliable trading partner. That is a major shift given how closely linked our economies have been. Before recent tensions, just over half of CFIB members said they traded directly with the U.S., with many more indirectly connected through their supply chains.
In response to ongoing uncertainty in Canada-U.S. trade relations, SMEs are actively adjusting their supply chains and customer relationships, with nearly half reporting that they are pivoting away from the U.S. Among those pursuing diversification, Canada remains the most common alternative market, cited by 71% of firms, followed by Asia at 41% and the European Union at 39%.
We are also seeing a notable shift in Canada-Mexico trade activity. In 2024, only about 8% of SMEs reported trade with Mexico, but as firms look to diversify their supply chains and reduce reliance on the U.S. market, this figure has increased to approximately 19% as of April 2026.
Despite many SMEs looking to reduce their reliance on the U.S. market, CUSMA remains an important and valuable framework for small businesses. The agreement provides greater certainty, supports integrated North American supply chains and makes it easier for businesses to trade.
In the context of the upcoming CUSMA review, CFIB’s preliminary June data shows that a majority of SMEs, or 65%, believe Canada should take the time needed to secure the best possible agreement, even if it means more short-term uncertainty. This reflects a clear preference for stability and predictability over rushed decisions.
SMEs continue to face rising costs and ongoing trade uncertainty. Many also feel that government support is geared toward large-scale investments and major funding announcements that often fail to reach small businesses. For example, the Regional Tariff Response Initiative that is supposed to assist small businesses facing trade uncertainty is virtually inaccessible to most firms affected by tariffs. Yet it is SMEs that make up the vast majority of businesses in Canada and serve as the backbone of local economies and communities.
Going forward, SMEs are looking for a strong and stable CUSMA outcome that restores confidence, certainty and predictability in North American trade.
Thank you.
The Chair: Thank you very much, Ms. Auger. Mr. Roy, you have the floor.
René Roy, Chair, Canadian Pork Council: Mr. Chair and honourable members of the Senate, thank you for the opportunity to appear before the committee as you examine the upcoming joint review of CUSMA.
[Translation]
My name is René Roy, and I am a pork producer from Quebec. I am the chair of the Canadian Pork Council, which represents more than 7,000 pork producers in Canada. Our sector supports over 100,000 jobs and generates more than $8 billion in farm gate receipts annually. I am joined by our CEO, Stephen Heckbert.
[English]
From the perspective of Canadian pork producers, there are three priorities for Canada in the 2026 joint review: First, ensure continuity and stability by unequivocally supporting a full, long‑term extension of CUSMA, preserving its duty-free architecture and core disciplines rather than reopening the agreement. From our perspective, business continuity of the trade agreement must apply.
Second, proactively resolve trade irritants, including labelling and subnational measures, using CUSMA’s consultative, technical and dispute settlement mechanisms, as well as bilateral and trilateral forums.
Third, strengthen North American competitiveness by accelerating implementation in customs, trade facilitation and regulatory cooperation so that goods, inputs and people move efficiently across our borders.
Our message is clear: CUSMA is working for Canadian farmers, workers and consumers. A predictable, long-term renewal is essential to the competitiveness and security of our integrated North American pork sector.
The Canadian Pork Council supports renewing CUSMA for another 16-year term, as per the agreement’s procedures. Trade irritants should be addressed through existing mechanisms. The pork sector has built what is effectively a borderless North American industry. Canada raises about 25.5 million pigs annually and exports nearly 70% of its production, with the United States and Mexico as key markets. Our success depends on open, predictable and efficient borders.
Disruptions to this integration would quickly mean lower returns for farmers, reduced plant utilization and higher prices for consumers across all three countries.
In a more volatile global environment, a stable and integrated North American food market is both an economic and strategic asset. CUSMA supports resilience by ensuring predictable access to safe, high-quality food within an enforceable framework.
We are concerned that non-tariff trade barriers such as country-of-origin labelling and subnational regulations could create market friction.
Two trade obstacles that the Canadian pork industry is currently experiencing are the following: First, there is the U.S. country of origin labelling law called COOL. It is a U.S. consumer labelling law requiring retailers to specify the geographic origin of certain food products, including meat. Canadian producers who sell piglets to the United States to be fed and raised in the U.S. no longer qualify for the premium “Product of U.S.A.” label.
Second, California Proposition 12 prohibits the sale of pork in California unless the animals are raised under specific housing conditions established by the State of California. Canadian pork exporters who cannot meet these requirements are entirely locked out of the California market. These two examples show that uncoordinated approaches raise costs, complicate supply chains and create uncertainty. The CUSMA review is an opportunity to prevent such barriers, reinforce national treatment and ensure that subnational rules do not impose extraterritorial production requirements.
CUSMA has strengthened Canada’s pork and red meat sectors, supported high-quality jobs — especially in rural communities — and improved food security and affordability across North America. Canada should be a strong, consistent voice for preserving and strengthening this partnership while using existing tools to manage trade irritants.
The Canadian Pork Council stands ready to work with the Government of Canada and parliamentarians to ensure CUSMA continues to deliver for Canadian farmers, workers and families.
We would be pleased to answer your questions.
The Chair: Thank you very much, Mr. Roy. I would like to acknowledge that Senator Woo of British Columbia has joined the meeting.
Colleagues, we’ll start the question round here. As per usual, it’s three minutes each, so please keep your preambles short and your questions concise. I would offer the same advice to our witnesses in terms of keeping your answers fairly concise.
Senator MacDonald: It’s good to have people from small business here today. We appreciate you coming.
Recently, Dan Kelly, President and CEO of the Canadian Federation of Independent Business, mentioned small Canadian companies view U.S. tariffs as a less bitter pill to swallow than all of the headaches and costs associated with demonstrating CUSMA compliance.
What additional measures could the Government of Canada take to help Canadian businesses, particularly small- and medium-sized businesses, navigate the certification and documentation requirements associated with CUSMA compliance?
Ms. Auger: Thank you for that question. When it does come to rules of origin and CUSMA compliance, it is a tedious task for small business owners to sort through all the documentation. When they work with a customs broker or courier company, obviously charges get added to that. When we saw that comment by Dan Kelly, it was accurate. A lot of business owners are asking, “Is it the 10% non-CUSMA compliant, or do I swallow the price with the couriers and go through the paperwork?”
When it comes to measures the federal government can take, we have to take it in the context of the actual business environment that we’re operating in. Costs have risen significantly for small business owners. Now we’re continuing to increase costs to certify CUSMA. We need to look at ways the federal government can not only support with educational tools but also look at reducing burdens and reducing the workload on small businesses and their costs as well.
Corinne Pohlmann, Executive Vice-President, Advocacy, Canadian Federation of Independent Business: What has complicated this further is the fact that the de minimis was removed by the United States, and that is where we are seeing a lot of the impact. That’s where a lot of the decisions are being made. Because the rules of origin and becoming CUSMA compliant can be so complicated, they’re opting to pay it or, as we are seeing, they’re diversifying and moving into other markets instead.
I think the Government of Canada can do more to help businesses understand what it means to be CUSMA compliant. I don’t know if it’s done a great job at that, especially with smaller companies, because it can be very expensive and challenging, and there could be something there that we could potentially be doing to ease that process for them.
Senator MacDonald: The government has made a hopeful target of doubling our exports over the next decade or so. Do you think that’s realistic? If it is realistic, which non-U.S. markets do you think we should concentrate on for our exports for small business?
Ms. Auger: Yes, it’s an interesting feat if you look at the Statistics Canada data of businesses opening and closing. We’re seeing more businesses closing right now in Canada. If we’re not creating an environment where businesses can start up, can invest and can continue to grow, we’re not going to meet those targets. That’s really what our members are telling us today. It’s so challenging that they can’t even operate their businesses, and many are saying they’re ready for retirement and to close up shop.
On that part, it’s really focusing on how we make Canada a place where Canadians want to start a business. That is number one, and that’s the biggest challenge we’re facing. That’s coming from StatCan data, where more exits are coming than entries right now.
Regarding the second part of that question on markets to be focused on, our data is showing that Canada is becoming its number one market. With all these internal trade barrier movements, we need to see things go faster. There has been a lot of work on internal trade and removing some of those barriers, but it hasn’t been as fast as we had anticipated.
The Chair: Thank you very much. We’re over time on that segment.
Senator Harder: Thank you for your briefs. I must say I find nothing that I disagree with in your briefs, but it’s a challenging ask.
I would be interested in hearing — particularly from the Canadian Pork Council but also from CFIB — what you are hearing from your Mexican and American counterparts because what you can be very helpful at is making the linkages across your sectors to reinforce messages that find their way to negotiators around the table, not just the Canadians.
Stephen Heckbert, Executive Director, Canadian Pork Council: Having spent last week in the United States, both in Washington and then in Iowa, I have had conversations lately with folks from Congress and then with the Iowa Secretary of Agriculture.
Our relationships are actually quite good in agriculture. You will have seen that, last week, a letter was issued from both sides of the border, where 168 agricultural groups asked for the immediate renewal of CUSMA. The subtext of that was: Please leave us alone if you possibly can and try not to include agriculture in the “to and fro” on this. We think we’ve got agriculture resolved pretty well.
I spent quite a bit of time with my American counterparts, both from the National Pork Board and the National Pork Producers Council, and both reiterated again how good the relationship is across our borders, and I would say the same thing with our Mexican counterparts.
I will say for the committee’s benefit that sometimes the relationship between the United States and Mexico can be a little bit more challenging in agriculture, which is not true in every sector as well. But it is crucial that we continue to have those cross-border dialogues to the best of our ability, particularly in agriculture, just given the size of our integration.
If folks from the cattle industry were here, they would tell you a cow moves across the border two or three or four times. In our case, it is usually a live animal gets shipped from Canada to the United States and then we buy the product back.
The integration is what we were asked to do, and this can be a bit of a frustrating thing for our producers at this time because we have done what we were asked to do and now we are running into trade irritants based on factors beyond our control.
Senator Harder: I’m interested in your Iowa experience because the Iowa farm market has collapsed. I wonder how that is colouring their enthusiasm for the American position.
Mr. Heckbert: Yes. Without entering into very dangerous territory talking about U.S. politics in any way, shape or form, I will say that there is a recognition that Canada is a very good customer of the United States. Canada has been a very good partner for the United States in this industry, especially all across agriculture. We’re a key supplier of things like fertilizer, and we are a key buyer. The stats we often use are that the average Canadian buys somewhere around $800 in American products at the grocery store every year, and the average American buys about $150 in Canadian products in a year. So the surplus on an individual basis is quite large.
Our preference would be if we can really agree — and we would love national governments on both sides of the border to agree — that food security is too important for agriculture to be considered something you would negotiate as part of the “to and fro” of a normal trade dispute.
Senator Ravalia: Thank you very much to our witnesses for being here today.
Earlier today, President Trump once again threatened not to renew CUSMA. In the event it is not renewed this July, we would be in the situation of an annual review. What are the potential economic implications of this scenario, particularly with respect to business confidence in your respective industries? Ms. Auger, if we could start with you.
Ms. Auger: We have looked at the different scenarios that could occur, and we’re aware that the July 1 deadline is approaching very quickly, which is why we did ask our members in our June survey how they felt about the renegotiation process and whether it needed to happen quickly or slower. And 65% of our members are saying they would prefer Canada take the time it needs to get a better deal than to rush decisions.
The uncertainty, yes, comes with it, but it does seem in some ways that we have been seeing that our members have adapted somewhat, despite all of the uncertainty and the cost increases they have absorbed in the current situation.
With all of this, it doesn’t mean that our government can’t do anything to help small businesses and support them as they’re going through all these increased costs and all the uncertainty that is happening.
Ms. Pohlmann, would you like to add anything to that?
Ms. Pohlmann: No, I think you covered it. Essentially, our members are used to uncertainty, and uncertainty will continue even under that scenario.
The only scenario at this point that would really freak them out — for lack of a better term — is if there is an actual pullout by the United States, and they say, “We’re giving our six months’ notice, and we’re pulling out of CUSMA.”
If we continue on the path we’re on now, then CUSMA as we know it continues to exist and goes on an annual renewal. From an on-the-ground perspective, that’s okay for the moment, given the uncertainty they’ve become used to at this point. It’s not ideal, but it’s not going to change much.
Senator Ravalia: Minister LeBlanc’s recent trip to Washington on June 2 with U.S. Trade Representative Jamieson Greer was really not that fruitful. We heard about long-standing issues that the United States raised with us, but no specifics were revealed. From your industry perspectives, do you have any idea of what the key areas would be?
Ms. Auger: From day to day, something new seems to come up, and that is represented in the data we have from our members. Even if some kind of agreement were made by July 1, it just seems there is no certainty that the Trump administration wouldn’t change their mind about something else: a new tariff or a new sectoral tariff.
We’re seeing that right now with the global tariffs and the justification of the new 10% tariffs because of forced labour, which would replace those that go away on July 10. So it always seems like there is a new mechanism in place. That’s where our members feel that the long-term negotiation, with the uncertainty that comes with it, seems to be the best approach at this time.
[Translation]
Senator Hébert: Mr. Heckbert, you’ve spoken about your visit to Washington, as well as meetings with your American counterparts in the agricultural sector. Did you have any meetings with politicians in Washington?
Mr. Heckbert: Yes, indeed, we were there. The Canadian Pork Council is a member of the Canadian Agri-Food Trade Alliance, or CAFTA, an alliance based on free trade.
We were there. We had a series of meetings with people from the U.S. Senate and Congress.
Senator Hébert: What did you hear?
Mr. Heckbert: It was a bit more diplomatic this time. The discussion was a little more informal the first time.
It is obvious that the United States is entering a political season. They are trying to avoid what is currently happening with the president. Right now, I would say they have less substance, but they have been supportive. They understand that most American industries want the agreement to be renewed. They told us they will be using the new tariffs under section 301. That is their new tool. Since the use of the International Emergency Economic Powers Act, or IEEPA, to impose tariffs was struck down by the courts, they are now talking about using section 301.
We also noted a certain shift in the tone of the meetings. They are still supportive, but it was important for us to ensure that it is our American partners that were advancing the situation in their country.
[English]
Senator Hébert: If I understand you, they are telling you that they’re hearing from their industries in their respective territories that they want the Canada-United States-Mexico Agreement, or CUSMA, to be maintained and for all of this circus to end.
[Translation]
Mr. Heckbert: Yes.
Senator Hébert: Okay.
My question is probably best addressed to Ms. Auger and Ms. Pohlmann and concerns SMEs.
Some have welcomed the idea of helping SMEs diversify their exports by integrating them into the supply chains of foreign companies already established here. Once they are integrated into those networks — whether they be giants like L’Oréal or players in the transportation sector — this greatly facilitates their international expansion. Do you think that would be a worthwhile approach to propose and adopt?
Ms. Auger: That’s an interesting comment. It is clear that this government is genuinely interested in businesses.
Our data shows that SMEs have been making real efforts to diversify their operations. This is proving costly for them. Transport costs are the biggest barrier to diversification. Their costs are going up, yet they continue to seek out new markets. It is clear that, although integrating supply chains can help SMEs, some are already taking steps to diversify, which is very costly.
The Chair: Thank you very much.
[English]
Senator Ataullahjan: Ms. Auger, you gave us some numbers that are very discouraging about SMEs and small businesses not recommending opening businesses. You mentioned Canadians have long recognized that SMEs are the backbone of the Canadian economy. What kind of help, support or assurances could the federal government give to SMEs?
Ms. Auger: Right now, small businesses are looking for a cost reprieve. They’re looking for support from their federal government. When we asked business owners what they would like to see in terms of cost reprieve, their number one ask was to reduce the small business tax rate from 9% to 6% and to increase the threshold, which is set at $500,000. It has been there since 2009 and hasn’t moved with any inflation, but we’re asking to increase that to $700,000.
When it comes to cost reprieve, we’re also looking for other measures, such as reducing the red tape burden for small businesses. Approach a “two for one” at the federal government level in terms of: When you put a new regulation in place, let’s get rid of two and put in a new one. But it’s also about making sure that small businesses are being recognized by this government and that the programs being created to support them don’t just focus on big business.
When I talked about the Regional Tariff Response Initiative, or RTRI, set by the regional development agencies, or RDAs, there are so many limitations in terms of who can access those programs, and they’re not reaching small businesses.
Senator Ataullahjan: In conversations or in your asks, do you feel this government has been receptive to your concerns?
Ms. Auger: Some of the conversations are quite positive. I think people understand the data, and the data is not CFIB’s data. That is coming from Statistics Canada, which is showing that there are more businesses exiting right now and that the environment is quite challenging and something needs to change. I think that has been the receptive message.
We are hopeful of seeing more investment measures put forward by the federal government, but it would be great to see a cost reprieve for small business owners as well.
Ms. Pohlmann: It’s an important message. Increasingly, we feel that a lot of the direction that the current government is taking is focused on large companies. Ms. Auger did focus on that.
While we’re supportive of this idea of investing in major projects and building the infrastructure, a lot of the focus has been on those larger companies, and a lot of smaller companies are feeling more and more neglected and that they’re not necessarily being seen by this government as bringing the value that they actually do bring to the economy.
I think everyone sees the importance of small companies, but it’s the actions that you take to say, “Yes, we want you to grow, we want you to invest and we want you to do those things,” but right now, it feels a little like that is more focused on larger firms than it is on smaller firms. Our message is, increasingly, that you need to do more in terms of reducing costs and reducing regulations, not just for big companies but for smaller companies too. And sometimes that looks different for a small company.
The Chair: Thank you very much.
[Translation]
Senator Gignac: Welcome to the witnesses.
Several of my questions have already been asked, so I’ll just carry on.
We share your concerns. Like most people, we would prefer that Mr. Trump renew CUSMA. However, no one can control what he’ll do. I don’t even think the people closest to him know what he’s going to do next. I don’t even know if he knows himself.
Have you discussed that? The federal and provincial governments have ratified a number of agreements abroad. We have signed new trade agreements, particularly with Indonesia, and we are currently negotiating with the Association of Southeast Asian Nations. However, transport costs are the most important factor. The United States is our neighbour, so it’s easy to ship goods by rail or by ship. Our other trading partners are further away.
Have you proposed any programs to the provincial and federal governments to offset the transport costs that could be involved? What about that aspect?
Ms. Auger: Thank you, Senator Gignac.
We sent the government a recommendation letter highlighting the importance of providing SMEs with the support they need to successfully diversify. This is not just about transport subsidies. It is about the current overall environment for SMEs. We need to ensure that SMEs have the funds they need to invest both in diversification and in their businesses. We often hear talk of reducing tax rates for small businesses. When asked about this, business owners say they would reinvest that money in their staff and their businesses so that they could do other things.
Senator Gignac: The approach to this in the United States is very aggressive. Investments can be claimed as tax deductions from the first year. Could this kind of thing help your members?
Ms. Auger: I’ll let Ms. Pohlmann answer that one, because she knows more about that than I do. However, I would quickly point out that, yes, we recommend taking inspiration from what is being done in the United States in terms of investments.
I don’t know if Ms. Pohlmann would like to add any comments.
[English]
Ms. Pohlmann: That’s absolutely true. We have been asking for something they call immediate expensing for a long time, meaning that for the first up to $1 million that you spend in your business, you can immediately expense this as a business deduction. They had it for a while. It disappeared. It has been reintroduced but only for very limited sectors. We want to see it broadened out to all sectors so that anyone who makes those investments right up front — and it’s something the Americans have been doing for a while, and it’s where we’re at a competitive disadvantage at the moment. We need to expand that and make sure that we’re encouraging those investments in smaller companies.
[Translation]
Mr. Roy: We talked about transport costs, but our industry has established itself in processing. The more processing we do, the greater the added value and the more we can export a product that has real value. This brings transport costs down in relation to the total value of the product. If you look at our exports to Asia, most of our exports go to Japan. The fact that we export a value-added product to Asia allows us to increase our export capacity and reduce our dependence on our American neighbours. That is one part of it, but it is still important that efforts be made to enhance the processing capacity of Canada’s agri-food industry, not only through infrastructure, but also through healthy labour policies.
[English]
Senator Woo: Thank you to our witnesses. I want to ask Mr. Roy to expand on the country-of-origin labelling problem. I like to think the “Made in Canada” label is not a disadvantage. I know it is an advantage in certain Asian markets. Can you elaborate on what the problem is? Is it a kind of “Buy America” prejudice? Is it the fear of getting other countries’ products mingled with Canadian pork?
Mr. Roy: The current challenge with the country-of-origin labelling is that you don’t have access to the government supply chain. If you don’t have an American product label, you don’t have access to all the supply chains in the United States, notably at the government level, so this puts our products at a disadvantage.
The other challenge, of course, is the “Buy America” perspective of the consumer, which also puts our products at a disadvantage. It’s not a matter of the reputation of our products but more about the perspective of the consumer and the regulations in the United States.
Mr. Heckbert: The challenge on that is, actually, that the U.S. Department of Agriculture, or USDA, buys 5% of the pork in the United States. The U.S. government is an enormous buyer of the product, so we remove ourselves from that eligibility. Worse, the country-of-origin labelling creates a no man’s land for our product because we can’t use the “Product of U.S.A.” labelling because we don’t meet all the criteria for that. There isn’t a comparative label that we can use. It’s not a product of Canada because it’s a combined product, and there isn’t a “Product of North America” label. It means the product becomes labelled not with the official “Product of U.S.A.” labelling but with a different kind of label.
Particularly around the two hundred and fiftieth anniversary of the United States, where you’re seeing a big push on this kind of labelling requirement, products like ours are caught in a bit of a no man’s land regarding what the product is, so if nothing else, we’d love to see some other kind of label, whether it be “Product of North America” or “Product of U.S.A. and Canada.”
I don’t think Canadian food standards are ever in question in the United States. In fact, I do think the “Product of Canada” label would have some advantages. We just can’t use it if it hasn’t been processed in Canada. Again, that ties it back to the processing question.
Senator Woo: So it’s partly a government procurement problem as well as a “Buy America” problem, right? Could we solve it at the level of government procurement? We have some government procurement provisions in CUSMA.
Mr. Heckbert: We just don’t have the same habits in terms of the amount of food we would purchase. School lunch programs in the United States are a big purchaser. Some of it is military procurement. Sometimes the USDA buys for a whole series of other requirements as well. This is a long-standing thing that the USDA has been doing on behalf of their government, so we could possibly look at a similar kind of system for Canada. One of the unofficial ways in which you can ask for “Product of U.S.A.” labelling to be enforced is by saying that we want to see the label on the product that you’re shipping us.
Senator Adler: I’ll put the question to Michelle Auger, but anyone else on the panel is free to jump in.
The President says a lot of things. The American President said again today that there’s nothing that Canada has that America needs. In my opinion, the only intelligent response is one that’s data-based as opposed to just exchanging rhetoric. One simple data point is a billion barrels. U.S. refineries buy a billion barrels of crude oil from Canada. Approximately 10 refineries in the United States are geared to only use Canadian crude oil.
My question is: Since businesses know bloody well that, in every business network, the reason people use a supply chain is because the supply chain is reliable and it has a good price, why should anyone take seriously the notion that if Canadian business didn’t exist, it wouldn’t make a difference? Why should anyone take that seriously?
Ms. Auger: Yes, it’s an interesting comment that you make. Our supply chains are fully integrated, and that has been the message from our members. Those who trade have business-to-business contracts that some of them can’t break out of. They have their clientele base there. They’ve built relationships. It’s not so easy for a lot of our members to just pull out and pull away from the U.S. market. They’ve built these strong relationships with those folks, and they cannot just move those supply chains away. There is that level of trust that has been built with those clients.
I’m not sure, Ms. Pohlmann, if you would like to add to that.
Ms. Pohlmann: I have to be honest. I think we expected this sort of rhetoric to start now because of the July 1 deadline coming up. I’m not surprised he made comments about many things about Canada in the last few days. He’d been ignoring us for a while, given there were many other things going on with the administration. I think it is part of the negotiating tactics of the President and of the American administration to suggest to Americans that they don’t need us, but I think you’re absolutely right.
The data tells us a completely different story, and I’m sure that our colleagues here from the Canadian Pork Council, given their discussions with their American counterparts, will also tell you that when you talk to people on the ground, they don’t believe that either in the U.S. I do think this is part of the rhetoric that’s going to continue to grow between now and July 1 as we see what happens.
Senator Adler: All governments do a lot of messaging, maybe more messaging than governing, but the latest message from our government is “Fortress North America.” For anyone on the panel, what does that mean in the real world, or is it just a message?
Mr. Heckbert: I think what that would imply, from our perspective, is that we accept the integration that we’ve built between our two countries is now so profound and complete that it requires us to elevate ourselves out of the discussion about these sorts of irritants and instead talk more about the fundamental and foundational value of us working together no matter who is in power and no matter what the perspective of an individual leader is. And, instead, we must try to accept that for the resources we share between our two countries, if we focus on building them together, we would be 10 times stronger than if we focus on recognizing the imaginary line along the forty-ninth parallel as being such a significant barrier to trade across the two countries.
Senator Adler: What we need is free trade for protection? No fortress without free trade, is it?
The Chair: I think that’s where we’ll leave it, senator.
Senator Coyle: Thank you to all our witnesses today. My first question is for Ms. Auger from CFIB. You talked about the challenging environment and losing more businesses than gaining. Do you have any disaggregated data on sectors?
Ms. Auger: I do have a whole slide deck here that I could leave with you afterwards, but there are certain sectors that are more affected than others. Agriculture is certainly one of those, where we see 12 consecutive quarters of business loss. I believe wholesale is part of that.
We are seeing certain sectors affected more than others. Where we’re seeing increases are around health and education — maybe it’s because of investments from the federal government in those areas. But generally across the board, there are several sectors really feeling it harder than others.
Senator Coyle: And geography?
Ms. Auger: Yes, there are some differences across the country as well by province. We are seeing certain provinces that are faring better than others. Ontario, unfortunately, is one of the provinces that has been hit hard, given all the sectoral tariffs. British Columbia is another one of those provinces where the quarters don’t look that great. There are a couple of provinces that have somewhat stabilized, but we’re not seeing any positive numbers overall.
Senator Coyle: Do you have historical data? I don’t know whether you can look at cause and effect or maybe the correlation between when CUSMA came in and what that did when CUSMA was new to the independent business sector.
Ms. Auger: There is data that we have in a report — and I will happily follow up with this offline. We put out a report in mid-April this year looking at StatCan data and, in fact, outside of the pandemic, right now is the worst time in history in terms of the number of businesses exiting. So it’s not a blip. It really is something that is happening right now with the Canadian business environment.
We’ve got tons. We’re happy to share and follow up with you afterwards. I’ll make a note.
Senator Busson: Thank you for being here. My question is for our Canadian Pork Council witnesses. I listened with intent to Mr. Roy’s presentation around some of the irritants and barriers to exporting to the United States, and one of them was country of origin. The other one you talked about was California Proposition 12. You said that pork had to be raised under certain circumstances. Could you explain a little more about how that acts as a barrier and what could be done about it?
Mr. Roy: Yes. The major challenge is that, in California, they have a ballot initiative and referendum, and through a referendum from the public, they have put certain regulations around animal welfare. So every time they want to buy certain animal products, they must respect, I would say, imaginary welfare laws that they have created in California.
Even if we are in Canada, if we want to access the California market, we have to abide by the rules of this specific state, which is not fair according to our trade agreements. But also it can be changed at any moment. Even if somebody wants to abide and create the building that it requires — because you have to change your infrastructure to be able to meet these requirements — the day after you make these changes, it is possible that there will be new requirements that are created. So it creates a lot of uncertainty from a business perspective and, frankly, it’s a situation where it is really hard to do business.
Senator Busson: Is there a CUSMA solution for that or any kind of solution for that?
Mr. Roy: We are working with our counterparts in the United States. Pork producers are also against this kind of regulation because it creates compartments within the United States. We are supporting them. But I would say that the bilateral discussion is certainly the best way to approach the situation.
Mr. Heckbert: If I may, senator, there is a legislative solution, absolutely, separate and apart. But one of the things is if there were stronger dispute resolution mechanisms within CUSMA over these kinds of subnational government regulations — it’s really that it’s very difficult for us to have 50 different trading relationships with 50 different states. Even though California is a big state, it simply allows Rhode Island, Delaware or Alaska to have their own regulations surrounding any number of these things. The best solution is that we have a trading relationship with the entire country, where the entire country is governed by a series of regulations, and, therefore, we can have predictability while doing it. If our dispute resolution mechanism were stronger, we could solve that problem.
The Chair: Thank you very much.
Senator Wilson: My question is for CFIB. I thought your solid and implementable recommendation around government working with small- and medium-sized businesses to help them better understand CUSMA and how to be compliant is something we should definitely take away. I was heartened by what you said about the increase in trade with both Asia and Europe. One of the things we have heard when we talk about diversification away from North America is that it’s very difficult for small- and medium-sized enterprises to access that.
I would be interested in some comments on things we could be doing on that front in addition to the CUSMA recommendation.
Ms. Auger: Anecdotally, we have been doing some work on understanding what those barriers are for small businesses. We have reached out to quite a few who have taken the steps of diversifying. But anecdotally, what members have been saying is even when you’re going into the EU market, it’s about finding those customers and being able to access that market and the different — I forget how many EU states are a part of it. It is about being able to navigate some of their compliance measures as well, and they have some stringent environmental rules that also make it harder for small businesses to even get into that market.
Being able to have those supports, whether it’s through the Trade Commissioner Service, is extremely helpful.
Over at Global Affairs Canada, they have what they call the CanExport SMEs program, but the money runs out so quickly. Small business owners generally like it, but there is a focus right now on key industries and often, again, not meeting the mark for small businesses.
Ms. Pohlmann: If I may, I would also add that if Canada is to continue to negotiate new free trade agreements — and I think the plan is to do that — or renegotiate CUSMA in some form, we often push for not just a small business chapter, which is increasingly becoming a part of these trade agreements, but rather to go beyond just a small business chapter and include a small business component to most of the chapters that are relevant to small businesses. I think sometimes they give a small business chapter just to pay a little homage to small businesses and say, “Yes, you need more information,” but it’s about actually looking at some of the different chapters and thinking about how we can make it better and easier for small companies to address this particular issue. It’s not just looking at what larger firms need because sometimes what smaller businesses need is quite different.
I think if we added that extra piece into many more trade agreements going forward, it would help make some of these compliance issues, in particular, a little easier for small companies.
The Chair: Thank you very much. We’re over time. I know, Mr. Roy, you had your hand up, but I want to move on because we don’t have much time.
Senator MacDonald: I want to go back to the 2018 negotiations for a few minutes. I was surprised and disappointed then when Mexico sat down with the U.S. and we weren’t at the table for a number of weeks. Did anything come out of that negotiation that surprised small business in Canada? Is there anything that came out of this that you didn’t like and you would like to see changed today in the new negotiations?
Ms. Auger: Ms. Pohlmann, I think you were looking to answer that.
Ms. Pohlmann: It goes back to some of the compliance requirements and some of the subnational levels of government. We talked about it before with the Canadian Pork Council.
There is still a lot more work to be done dealing with those subnational levels of government and some of those compliance measures. And the biggest one that our members are affected by is the rules of origin. They made changes to the rules of origin in 2018 to essentially make it easier, but in doing so, it actually kind of made it harder. Now the way that it’s set up, it’s a bit looser in terms of there are no set parameters on what you need to do, but it can be a lot more complicated to figure it out as a result.
When you try to make a regulation or a compliance mechanism easier by making it less prescriptive, it can sometimes make it harder for smaller companies because they don’t always have the ability or the skills to necessarily understand what they need to do in order to be compliant. That would be one example I would put forward.
[Translation]
Senator Hébert: I actually have a question that builds on my colleague’s question.
Ms. Pohlmann, you mentioned the difficulties SMEs face in gaining recognition under CUSMA. I know you’ve already requested specific services for SMEs to help them in other areas.
Do you have any recommendations in that regard for the Canadian government that could help SMEs to be classified more easily?
Ms. Auger: Global Affairs Canada has developed tools to help, but they are at a fairly high level and not all the calculations are detailed enough.
When you have a new product sourced from Europe that is incorporated into your product through processing, this involves a great deal of calculations and paperwork before the product can be certified as compliant with CUSMA.
It’s not easy to navigate this. It requires a certain amount of expertise. We’ve held webinars through a brokerage service to educate SMEs, but it takes much more than that to make the whole process run smoothly and efficiently.
Senator Hébert: What is needed is support similar to what is provided in our overseas missions when they support businesses, but at a local level, if only to be able to classify themselves.
Ms. Auger: Something that wouldn’t be too expensive.
Senator Hébert: I understand. Thank you.
[English]
Senator Harder: My final question is with respect to the ongoing good communications between your respective organizations and the negotiating team. It has been some months now, and it will undoubtedly be some months ahead. One of the things this committee can do is monitor that Canadian interests are being listened to if everything is not entirely going their way.
Can you assure us that your interests are being taken into account, that you’ve got good relations with the negotiating team, that the understanding of your positions is very contemporary and that you’re feeling there is a Team Canada approach at play here?
Mr. Heckbert: I’ll let Mr. Roy start, if I can.
Mr. Roy: I will start, but then it will be to Mr. Heckbert.
Again, we are working in a really close relationship with the embassies and various delegations, not only at the business level but also at the government level.
Also, I wanted to mention we are working with various agencies, such as the Canadian Food Inspection Agency, which also helps to promote our products elsewhere. So it’s also really helpful in our advocacy.
The Chair: Ms. Auger or Ms. Pohlmann, would you like to intervene?
Ms. Auger: I would add that we are a highly data-driven organization. We’ve got data on pretty much anything trade-related. In the last few months, we have been sharing and putting this forward with Team Canada and the U.S. embassy. We have tried to stay in contact as much as possible with all of the updated data and the perspectives of small businesses.
However, from the SME perspective, 73% of them are saying they feel this government doesn’t necessarily have their backs, so there could be a better understanding of what SMEs are going through right now.
The Chair: Thank you very much. I’m afraid we’re out of time. I know, Mr. Heckbert, you wanted to get a word in, too, but we just can’t do it right now.
On behalf of the committee, I would like to thank Michelle Auger, Corinne Pohlmann, René Roy and Stephen Heckbert for joining us today. Your testimony is very important. As we move into the summer, we’re into a very significant phase in terms of CUSMA and discussions around it. Again, thank you very much.
For our second panel, we welcome, from Associated Equipment Distributors, Brian Osterndorff, At-Large Director; from the Canadian Kitchen Cabinet Association, Sandra Wood, Executive Director; and from the Canadian Construction Association, Louis-Philippe Champagne, Associate Vice-President, Public Affairs and Industry Practices.
Thank you all for being with us today. Without further ado, we’re ready to hear your opening remarks. Mr. Osterndorff, you will have the floor first, followed by Ms. Wood and Mr. Champagne. Please go ahead.
Brian Osterndorff, At-Large Director, Associated Equipment Distributors: Thank you, chair and senators, for the opportunity to appear today.
My name is Brian Osterndorff. I am the President of Robert’s Equipment, a family-owned equipment dealership with six locations across southwestern Ontario. I serve on the board of directors of Associated Equipment Distributors, or AED, and I’m proud to represent AED here today.
AED is the largest Canada-U.S. trade association, representing companies that sell, rent, service and manufacture heavy equipment and whose combined operations generate more than $100 billion annually across Canada and the United States. In Canada, AED members account for more than $8.7 billion in annual sales and service activity, employ over 27,000 Canadians and operate more than 400 locations across the country. Our members support the agriculture, construction, mining, forestry, energy, transportation and infrastructure sectors.
These are not simply industries we sell equipment to; they are the industries that build homes, produce food, develop critical minerals, harvest natural resources, move goods and power our economy.
Few industries are more dependent on a strong and integrated North American economy than ours. The equipment used on Canadian farms, construction sites, mines, forests and infrastructure projects relies on highly integrated supply chains that span Canada and the United States. Components are sourced, manufactured, assembled, distributed and serviced on both sides of the border. In many cases, those components cross the border multiple times before a machine reaches a customer.
Last week, my counterparts from the United States were in Washington, D.C., meeting with more than 100 members of the U.S. House and Senate as well as administration officials. Their message was no different from the one I am sharing with this committee today. The success of our industry depends on an integrated North American economy, and maintaining free and fair trade between Canada and the United States is in the interests of workers, businesses and communities on both sides of the border.
That integration has allowed our industry to remain globally competitive and responsive to the evolving needs of the industries we serve. It has helped Canadian businesses access specialized equipment, advanced technologies and critical components that often cannot be sourced elsewhere.
When tariffs were imposed in 2025, equipment manufacturers, dealers and customers across North America felt the impact. Many key components are highly specialized and sourced from specific suppliers, often leaving few practical alternatives available. When equipment costs rise, contractors pay more, farmers pay more, mining companies pay more and forestry operators pay more. Those costs ultimately work their way throughout the broader economy.
As Canada approaches the review of CUSMA, AED believes there is an opportunity not only to preserve the success of the agreement but to strengthen it.
We encourage the Government of Canada to pursue tariff certainty, seek relief from measures that disproportionately impact the heavy equipment sector, ensure clear and predictable trade rules for critical equipment components and continue working closely with industry to understand the real-world impacts of trade policy decisions.
Most importantly, we encourage policy-makers to recognize that the heavy equipment industry is not simply another sector of the economy. It is an enabling industry. The sectors that governments rely on to build housing, develop critical minerals, strengthen energy security, improve productivity, harvest Canadian food and grow the economy all depend on reliable access to equipment and integrated North American supply chains.
AED’s message is straightforward: Free and fair trade works, integrated North American supply chains work, and a strong CUSMA remains critical to the long-term competitiveness of both Canada and the United States.
Thank you. I look forward to your questions.
The Chair: Thank you, Mr. Osterndorff. Ms. Wood, you have the floor.
Sandra Wood, Executive Director, Canadian Kitchen Cabinet Association: Chair and honourable senators, thank you for the opportunity to appear before you today.
The Canadian Kitchen Cabinet Association represents manufacturers across Canada that produce kitchen cabinets, bathroom vanities and related products. Our members are primarily small- and medium-sized businesses operating in communities across the country.
Together, the sector supports more than 25,000 jobs and 3,700 businesses and contributes approximately $4.7 billion annually to Canada’s economy. Our industry is an important example of value-added manufacturing, transforming Canadian forestry products into finished goods that support housing construction, economic growth and employment across Canada.
Our industry is experiencing first-hand how changing trade patterns and supply chain disruptions can directly affect Canadian manufacturers. While the United States delayed a planned increase in tariffs from 25% to 50% until January 1, 2027, the current tariffs remain in place and continue to affect Canadian manufacturers.
Meanwhile, Canada is increasingly experiencing trade diversion as imported products seek alternative markets. Since 2019, cabinet imports into Canada have grown by approximately 20% annually. In the last 18 months alone, import values increased from $176 million to $231 million, while import volumes rose from 3.7 million to more than 5 million units.
Cabinet imports into Canada have increased dramatically as global trade flows have shifted. Much of this growth has originated from Asia, particularly China and Southeast Asia, as suppliers sought alternative markets in response to changing North American trade policies.
At the same time, the United States has taken action to address import surges and trade distortions in the wood products sector through section 232 tariffs, including the 25% tariff currently on kitchen cabinets and vanities in Canada.
These pressures are having real consequences. Many manufacturers have experienced significant revenue declines, reduced production, delayed investments, workforce reductions and facility closures. Our members have already had to lay off employees or scale back operations. These are often family-owned businesses that have operated in their communities for decades.
For example, South Shore Furniture, a Quebec furniture company in operation since 1940, has just shut its operations and laid off over 120 staff in late April. Companies across Ontario, British Columbia and other parts of the country are cutting staff and reducing production capacity.
As Canada prepares for the review, it is important to recognize that manufacturing capacity is a strategic asset. Strong North American trade depends not only on the movement of raw materials but also on maintaining competitive value-added manufacturing industries that create jobs and investment.
There are three key priorities: First, Canada should recognize value-added manufacturing sectors such as cabinet manufacturing as strategic contributors to economic security, supply chain resilience and North American competitiveness.
Second, the government should continue expanding opportunities for Canadian-made products or “Buy Canadian” products through procurement policies and housing initiatives that support domestic manufacturing capacity.
Third, Canada should ensure that trade remedy and safeguard mechanisms are responsive when industries face significant market disruption. By the time relief measures are implemented, considerable damage has often already occurred.
Finally, as Canada enters the review, policy-makers should not only consider the largest sectors that are being impacted but also the growing use of section 232 tariffs on downstream value-added wood products, including kitchen cabinets and vanities.
January 1, 2027, is fast approaching. Unless alternative arrangements are reached, the U.S. tariff on kitchen cabinets and vanities is scheduled to increase from 25% to 50%. Combined with ongoing import pressures from Asia, this creates significant uncertainty for Canadian manufacturers at a time when many businesses are already under significant strain.
Thank you. I look forward to your questions.
The Chair: Thank you, Ms. Wood.
[Translation]
Mr. Champagne, you have the floor.
Louis-Philippe Champagne, Associate Vice-President, Public Affairs and Industry Practices, Canadian Construction Association: Mr. Chair, honourable senators, on behalf of the Canadian Construction Association, I would like to thank you for the opportunity to share our industry’s perspective on Canada-U.S. trade relations and the state of free trade in North America.
[English]
My name is Louis-Philippe Champagne. I am the Associate Vice-President of Public Affairs and Industry Practices at the Canadian Construction Association, or CCA.
The CCA is the national voice for the construction sector, representing over 18,000 companies and employing 1.6 million workers coast to coast to coast. Our membership reflects the full spectrum of Canada’s construction industry, from the vertical-built environment to horizontal civil infrastructure and road building.
Over the past few years, the world has had to adapt to a more complex and rapidly shifting political and trade landscape. From aggressive tariff policies to the erosion of global alliances, governments are navigating growing uncertainty with no simple solutions.
As a result, Canada sought to protect its economic interests by diversifying its trade relationships with partners in Europe and Asia while imposing countermeasures when needed. While these measures allowed Canada to protect some of its critical exporting industries, many domestic sectors relying on global supply chains were forgotten. The Canadian construction industry is at the top of that list.
Construction imports large volumes of materials in order to build the projects that Canadians need and deserve. Nearly one quarter of the manufactured inputs used by our industry are imported, with almost 15% coming from the U.S. alone. When trade barriers are introduced, the impacts are felt immediately on job sites across the country.
We are already seeing those impacts. According to Statistics Canada, 71% of construction businesses report facing higher costs due to tariffs. At the same time, the cost of construction is trending upward, mostly due to the increased price of inputs.
These added costs affect budgets and timelines and, ultimately, Canada’s ability to build the infrastructure, housing and trade corridors that our economy needs. Taxpayers end up holding the short end of the stick and footing the bill.
Policy-makers rightly describe U.S. tariffs as self-defeating, but the same logic applies when Canadian tariffs undermine our domestic industries. Canada needs policies that safeguard our sovereignty and interests without undermining our growth and competitiveness.
As negotiations begin on the future of CUSMA, our message is clear: Keep fighting for free trade. Ensure reliable access to essential materials across North America. Harmonize the rules of origin requirements to reduce the administrative burden on contractors. Strengthen the dispute resolution process to reduce uncertainty. And ensure labour market mobility is aligned with economic demand.
Let me be very clear: Canada’s construction industry will always stand for Canada and for its interests. Builders are proud to use Canadian materials and support Canadian industries, but domestic capacity must be built, not improvised. Our request is simple. We need a policy environment that enables us to do our job, get shovels in the ground faster and build the projects we need to defend our country against future economic challenges that continue to arise from geopolitical volatility.
With that, I’ll be happy to answer your questions. Thank you.
The Chair: Thank you, Mr. Champagne.
We’ll go into questions. Senator Harder, the deputy chair of the committee, will start.
Senator Harder: Thank you to our panel for being clear in your goals for this round of negotiations and your hopes for Canada’s position.
Perhaps I can hear from everyone, but I want to start with Mr. Osterndorff because you spoke of conversations you’ve had with your counterparts in the United States. I’d be interested in hearing more but also whether or not your counterparts in Mexico have been part of your conversations. And if so, are they aligned as well?
I would then ask the others to comment on the relationships you have with counterparts in the United States and Mexico.
Mr. Osterndorff: Thank you for this question, senator. Yes, we were in Washington just recently. We haven’t had full reports back on what happened there with those conversations, but I can tell you that Associated Equipment Distributors, or AED, is very fiercely engaged with the idea that there is an opportunity for free and fair trade between the two countries.
From what I’ve heard, those conversations have not happened with Mexico. It’s been very much related to Canada and the U.S. at this point, unless the other members have something?
Ms. Wood: From our perspective, yes, we have a very good relationship with our U.S. counterparts. It’s called the Kitchen Cabinet Manufacturers Association, or KCMA, in the U.S. We’ve had discussions with them for a number of years now with regard to the cabinetry that is entering even into the United States at below fair market value. We’ve had many discussions around that.
We were somewhat surprised when they announced the section 232 tariffs on our industry. We weren’t expecting that. It caught us off guard. We did see the report. They shared that with us. They haven’t held back any information. They gave us the reasons: They believe the product that is threatening their industry is coming through Canada. They’re seeing the increase in imports that are coming into Canada, as we are. They are seeing that it is making its way into the United States.
From their perspective, until we address that issue, they won’t do anything to advocate for us to drop those section 232 tariffs.
Senator Harder: And Mexico?
Ms. Wood: I haven’t had any discussions with Mexico. Primarily, we’ve been dealing with KCMA and the U.S.
Mr. Champagne: We must say, in construction, we are a very integrated market in North America. Many of our members operate in the U.S. and vice versa and in Mexico as well, yes. We’ve been having ongoing discussions with our counterparts in the national associations both in Mexico City and in the United States.
To our great surprise, their challenges are not different than ours. If Canada imports a lot of construction material from the U.S. and Mexico, the United States also depends a lot on our manufacturing capacity in Canada. They have been seeing the same challenges on their work sites where Canadian goods can’t get easily to market at the same price, and they are seeing disruptions in projects.
This is what we heard just recently. In March, we were in the United States with our counterparts from both nations, having these discussions, and it’s a reality for all of them.
[Translation]
Senator Hébert: My first question is for Mr. Osterndorff.
[English]
You have members on both sides of the border. We hear President Trump often saying that he does not at all need what Canada has. We know that when it comes to aluminum, wood, potassium, petrol or whatever — you name it — that is not true. But when it comes to the manufacturing sector, is it a lower-hanging fruit for the Americans in the sense of what we are going through right now — and you’re selling manufacturing equipment in many sectors. How would you comment on this declaration or this vision from President Trump? Do they not need Canadian goods in your particular sector?
Mr. Osterndorff: The sector that I deal with is in the agricultural business. AED and the dealers there are very much aware that we both need each other. I believe many people in North America believe the relationship between the U.S. and Canada is strong. We’re very reliant on each other.
There are positive moves here for what we as Canada can offer. We have a lot of offerings in different products, whether that’s agricultural or energy, which the U.S. needs. We can support that, and we can do great things in Canada for the U.S.
Senator Hébert: They need it and they are not able to produce it. That means that your members in the U.S. — because you have members on the other side — are not able to produce what we are doing in Canada. Is that what you’re telling us?
Mr. Osterndorff: A lot of manufacturing happens in the U.S., but that equipment is used in Canada extensively. The back and forth is so critical. But there are products that we have — we can talk about fertilizer and energy — that the U.S. needs. So it is a back and forth. I don’t think one is reliant on the other in such a case.
Senator Hébert: I want to do some piggybacking on the question about Mexico from my colleague Senator Harder.
We heard you, Ms. Wood and Mr. Champagne. You have a great name, Mr. Champagne. I want to hear how your members see the possibilities offered by Mexico within the strategy of diversification that the Canadian government has put forward.
Ms. Wood: From our perspective, we haven’t had discussions around what is happening with Mexico. Our focus right now has been on the United States because those tariffs have impacted our industry.
Mr. Osterndorff: I agree with that. Our focus is on the U.S. agreements and the trade between those two countries. I believe that Mexico is very much in favour of what Canada does and would support us.
[Translation]
Mr. Champagne: The reality is similar. I would like to share some figures with you. I mentioned that 15% of North American raw materials are sent to Canada for use in construction. Of that total, 14.5% comes from the United States, while Mexico accounts for only 0.5% of the market.
Naturally, when we start any kind of discussion like this, resolving the issues with the United States remains a top priority. We expect our Mexican partners to prioritize an alliance with Canada so that we can work together and weather the storm, rather than trying to conclude separate agreements.
[English]
Senator Busson: Thank you all for being here. My question is basically for Ms. Wood.
I was dismayed to hear your conversations around the cabinetmakers from Ontario and British Columbia specifically going out of business. I know about those kinds of family businesses specifically across British Columbia, and I suspect they would be the same in Ontario and Quebec and other places.
There was some conversation about third-party transactions and third-country transactions. I was hoping you could tell me, just so I understand: Are these cabinets that come in from Asia bound for big-box stores, or do they end up with consumers through the web? How does that transaction work, given the allegation that they end up in the United States? Could you explain how that is happening or how it’s alleged to be happening?
Ms. Wood: First of all, cabinetry comes in what they call flat packed, and it enters Canada. It is sold in Canada. It’s assembled in Canada and then it’s sold in Canada. As well, because that product is sold in Canada, it’s sold to distributors in Canada who then can redistribute — it’s called transshipping — and can transship into the United States.
We were given this news, but we haven’t seen any of the hard data that supports that claim. We do know that imports have increased significantly into Canada, and we know how much is exported into the U.S. from Canada, and many of the manufacturers in Canada are doing business in the United States fairly.
We don’t have any hard evidence on that, so unfortunately I can’t give you anything more than that, other than to say that because Asian imports are increasing into Canada, the U.S. is of the opinion that it’s being transshipped through Canada and into the United States.
Senator Busson: Just for clarification, that would be with — I don’t mean to name names — companies like IKEA and big-box stores?
Ms. Wood: It could be any kind of company. It doesn’t have to be an IKEA. Companies set up shops and businesses in Canada. It’s a legitimate business and they import that product into Canada. They can market it in the United States. There is no problem with doing that, and then they sell that product into the United States.
However, because it’s assembled in Canada, you can get some ambiguity around whether it’s actually manufactured in Canada or not. From our perspective, it’s not manufactured in Canada. It’s simply assembled here. That’s probably where some of the risk is happening.
Senator Busson: And your solution for that is?
Ms. Wood: Our solution right now is, first of all, we’re negotiating with our counterparts in the U.S. They want to see tangible action taken by Canada to stop this transshipment. We have filed a safeguard measure to try to slow the import of product entering Canada at below fair market value because it’s significantly increasing. We need to slow it down; it’s pouring in.
Senator Ravalia: Thank you very much for being here and for your respective contributions to our economy.
Recognizing that our two economies, the U.S. and Canada, are integrally interwoven but we live in volatile times, have you begun to explore any other markets, given our diversification portfolio from government, such as Europe or the Indo-Pacific region? Are there any opportunities there for you to counter the dilemma you’re facing with the U.S.?
Mr. Champagne: In regard to construction materials specifically, the desire for diversification predates what has been happening in the last few years in terms of trade with the U.S. There is a strong desire to source a more robust supply chain across the world. This was really something of great concern during the recovery of COVID, with the supply chain crisis and the container crisis. Many of our construction companies, both large and small, such as SME subcontractors and large general contractors, are trying to create relationships in Asia and Europe to bolster that relationship. There are some challenges in the way, however.
Number one is the cost of transport. The reality is the U.S. is right there. The rest is across an ocean. There is an extensive cost to transport, especially when the price of oil is out of control, as it is now. There is also a different standard around the world. If you think of electrical supply, for example, the European market has different standards from Canada. That has been a challenge as we’re navigating the transition.
In 2025, something challenging happened for our members. When the first round of tariffs was put in place against Canada, there was a strong desire to diversify trade and say, “Let’s buy elsewhere than in the United States,” and many of our members were proactive in doing so because the dollar value was significant. For example, in terms of steel manufacturing, Türkiye was popular for many of our members in the Atlantic region, as it is both accessible and fairly affordable. As you know, the Government of Canada has moved in the direction from “Let’s diversify from the U.S.” in early 2025 to a desire to “Buy Canadian” through the tail end of 2025 and early 2026. It is an important policy to protect our domestic manufacturing capacity, but it comes with a challenge. When we put a line in the sand that says you must buy in Canada, regardless of price, it’s a much more difficult policy to apply as opposed to saying we’ll prioritize Canadian manufacturers by using fiscal or financial capacity.
Mr. Osterndorff: I believe there are opportunities available outside of the U.S. The challenge that we have is many of those components are made in the U.S. that can go across to Europe, and those are tariffed as well, so ultimately the price of that equipment is rising.
Our challenge with that is it’s the uncertainties that we have of where we go as dealers and representatives of farmers or construction customers. How do we invest in something when we don’t know where it’s going to be coming from, and how do we actually do it? I agree with the transportation costs. When you start bringing stuff from Europe, it’s a whole different thing to look at. It’s very troubling right now as business owners and for the consumers that we deal with. Everyone is uncertain about what happens next. It’s challenging for us to determine how we fulfill the needs of customers. It’s very difficult.
Senator Ravalia: Ms. Wood, do you feel that you are able to compete internationally?
Ms. Wood: The challenge for us at the moment is we’re struggling to compete in our own backyard. The notion of going offshore is daunting, to be honest with you. We need to resolve the competitive issues that we have here and in the United States, which is where many of our companies have invested heavily to build those relationships. It takes years to build the distribution networks.
Senator Coyle: Thank you so much to our witnesses this evening.
My first question is for you, Mr. Champagne. You mentioned, I think, something about labour market mobility. Could you dig a little deeper into that issue?
Mr. Champagne: I would be happy to. Construction — it won’t be a surprise for anyone here — is struggling with its workforce. It’s been an important focus of this government in the last few months. This, in great part, correlates to our capacity to incentivize the next generation to join construction careers. The industry is working hard on this and hopes that governments at all levels are stepping up their game as well. However, to fill the immediate need we currently have on work sites, we need to look at options around immigration and changes to our own immigration system to ensure we find the people we need to match the economic need of Canada, who, in great part, are tradespeople and skilled workers as opposed to highly specialized university graduates.
When it comes to CUSMA specifically, labour mobility is at the same place. We have good rules in place for highly educated individuals to move from and to Canada, but when it comes to the labour we need now — not just as construction but as the Canadian economy — there is a significant gap that needs to be addressed if we want to be able to build all these projects that we have on the agenda in Canada.
Senator Coyle: Ms. Wood, you mentioned government procurement, I believe. Is that right?
Ms. Wood: Yes.
Senator Coyle: With the new Build Canada Homes and all kinds of new projects that are coming on stream, have you been working with the government to really look at that issue?
Ms. Wood: Yes. We are definitely talking with government. We have identified some gaps in that the policies that currently exist don’t go far enough. They talk about the raw materials, but they don’t touch on the value added. This is where we’re having conversations to see if that can be changed.
As well, most of our members do not directly deal with government procurement. We’re usually subcontracted through developers and builders. We’re not in direct line, and we are more at the mercy of the supply chain, if you will, and what happens at the level above us in order to benefit our industry.
So, yes, we definitely want to see teeth in those policies. We want to see incentives to encourage builders to work with Canadian manufacturers, but we have some work to do to get there.
Senator Coyle: Mr. Osterndorff, there is this question of Build Canada Homes and major projects. Are you working hard to make sure that your members are going to be supplying the “boom” that we’re hoping to have here in Canada?
Mr. Osterndorff: Yes. There are a lot of opportunities here in Canada. From the labour side of it, I don’t think it’s strange to anyone to say that there’s a shortage of qualified technicians in our industry. That’s extremely challenging for us right now. For us to have investments in those people who want to get into the business, it’s hard to do that when we don’t know where our business is going to be going.
It’s really challenging to already be in a position where we don’t have enough people to do the job that we need to get done, and this adds another layer to it.
Senator Coyle: What sorts of labour are you looking for?
Mr. Osterndorff: Technicians to repair equipment, whether it’s construction or agricultural equipment, as well as robotic equipment in dairy operations. It’s that kind of stuff.
Senator Coyle: We just don’t have it?
Mr. Osterndorff: The pool is very small.
The Chair: I have a question for each of you.
Are you getting the access to the negotiating team that you would want or through members of the advisory committee? If you are, do you feel it’s going well?
We’ll start with Mr. Champagne.
Mr. Champagne: Thank you for the question.
I said it in my introduction, and I’ll say it again: When the Government of Canada discusses trade at any point in history, they tend to heavily focus on companies that export to the United States, which is fair. However, too often we forget about companies that depend on imports. Construction is not the only one, for sure.
We were disappointed when we saw the announcement of the Prime Minister’s new advisory committee that doesn’t include anyone from the construction sector. We believe it’s an important voice, especially at a time where Build Canada Homes, the Major Projects Office and trade corridors — all those projects — are coming down the pipeline. We believe there is a need for better consultation.
But I must say that the government has been consulting with us, to an extent, especially in terms of procurement policy, with the Buy Canadian Policy being top of mind.
Mr. Osterndorff: Yes, I would agree. Regarding the conversations happening, I believe it’s very positive that it’s going on right now. We always encourage more conversations, specifically with different industries. We appreciate the opportunity to come here today and express our concerns with it.
But on both sides of the border, when we say we’re in Washington and talking with our counterparts down there, the engagement is there. They want to hear from us and understand our concerns and problems. They are very open to that, and we are very open to those conversations to make sure we’re heard as an industry and that we don’t fall on deaf ears.
Ms. Wood: In general, lobbying and talking with government are fairly new for our association, I must admit. Up until the tariffs were announced last fall, we really weren’t overly active. However, we’ve had a number of meetings with various government officials, such as Innovation, Science and Economic Development Canada and the Softwood Lumber Division of Global Affairs Canada. We are currently pursuing a meeting with Build Canada Homes as well to discuss their policies. We’re optimistic that we can have the right conversations with the right individuals.
So, yes, the government has been open to hearing from us. For us, it’s more a matter of getting oriented as to whom we speak to and when and where. That’s where we’re at right now.
The Chair: Thank you very much.
Senator Hébert: My question is for all of you. Maybe I will start with Ms. Wood.
Some previous groups that came just before you said something like, “Most of our members agree that it’s best to secure the best agreement over rushing any decision or any bad deal that we could have.”
Would you say that is the feeling that your members are feeling too? Would you say they would agree with that? The situation in your industry is very different than some other industries. That’s why I’m interested in hearing your opinions.
Ms. Wood: Yes. Perhaps we are in a more unique situation than a lot of small business members are. For us, the situation is getting progressively worse every day, so speed is of the essence. We recognize and respect the fact that it takes time to negotiate those deals, and we have been meeting with Global Affairs Canada. We had a meeting just a week ago because we know the CUSMA negotiations are starting.
However, we also have our safeguard. Our understanding was that provisional tariffs would be applied once the safeguard was filed, but those provisional tariffs have not been applied, so we have no immediate relief on the situation that’s currently impacting our industry. We would certainly urge the government to reconsider and to apply those provisional tariffs while the Canadian International Trade Tribunal is doing their investigation.
Yes, obviously, we support — CFIB is an organization that we talk with frequently. We respect and value where they’re going and how they’re representing small business in Canada. A good deal is a good deal, and we want that too, and we’re optimistic that we’ll have one.
Senator Hébert: But right now, you’re suffering.
Ms. Wood: Yes.
Mr. Osterndorff: AED wants to work together with all of its members to make sure we get a good deal on both sides of the border. This isn’t something that Canada just needs. The U.S. needs it as well.
It’s important that we get to this quickly and get some resolve on this. There is a lot of indecision right now in our economy, and that goes down to farmers or consumers. What do we do now? What is going to happen tomorrow that we didn’t know was going to happen today?
It’s the costs that are the challenges for us. I can speak to a situation where there was equipment across the border last year that didn’t make it up to Canada. Part of the reason was that due to the tariffs being imposed, no one was sure what that cost was actually going to be. As dealers, we didn’t want to bring equipment up to Canada and then tomorrow the tariff comes off and now we have equipment that’s overpriced.
Uncertainty is the big challenge we have. AED is working very hard with both governments to make sure there is a speedy resolution to this.
Mr. Champagne: I concur on both of those.
I’ll reiterate that the best situation for Canada’s interests and America’s interests is free trade in North America. That is where we can get the best for Canadians. Having the best deal is essential, but there are some significant concerns about timelines here. It’s not doubted that the last year and a half has been a challenge for all construction companies. Construction is primarily SMEs. In particular, 91% of construction companies employed fewer than 20 employees. Navigating the challenging landscape and the changing mindset of the White House from one day to another has been extremely damaging. Getting back to predictability and stability as soon as possible is essential.
Senator Harder: Thank you again for your frankness. It’s very helpful.
I want to ask about the provinces. Premier Ford is in Pennsylvania today, I believe, and he and the Governor of Pennsylvania signed what they describe as a $20-billion trade deal.
Is any of your advocacy with the provinces as well? It is interesting for me how strong the provincial leadership has been in terms of supporting a Team Canada approach during this period. Are you using your advocacy network not just for Ottawa but also for the provincial capitals? Are you making traction there as well?
Mr. Champagne: I can start.
The Canadian Construction Association is a group of associations. We have 57 provincial and local associations among our network in every province and territory. They have been very engaged at the provincial level. I, personally, and my president have met with a number of ministers and deputy ministers at the provincial level who have concerns.
The main thing I would share is that the reality of one province is not the reality of all provinces. When it comes to trade, southwestern Ontario is a very unique region with the steel and auto sectors being predominantly there. B.C. has challenges of its own when it comes to access to construction material from Eastern Canada. They all navigate that in a very meaningful way, trying to adjust their procurement policy and engage with their U.S. counterparts, but it is a challenge that we can only face together.
It is essential that Ottawa works with all provinces and municipalities on trying to resolve that challenge.
Mr. Osterndorff: For Associated Equipment Distributors, or AED, as I mentioned before, the Canadian contribution is over $8.7 billion, so it is very much across Canada that AED is involved with. It’s important that those conversations do happen on a province-by-province basis so that the full voice of Canada is heard.
Our association is very engaged with provinces and getting that message out and engaging their members to be a voice on this issue.
Ms. Wood: The Canadian Kitchen Cabinet Association has not currently been pursuing anything at the provincial level. We know that is the next step for us. Most of the issues that we are dealing with around trade and procurement policies are at the federal level, and that’s where we have focused our energy at this time.
Senator Harder: Thank you. Keep up the good work.
Senator Adler: My question is for Sandra Wood. It’s a bit of a homer question. I’m based in Manitoba, and one of the treasures of Manitoba is the cabinetmaking industry, which is one of the most successful industries in the world, with much of it based in Manitoba. If you don’t mind, tell us: What’s the magic? What is it about cabinetmaking and the cabinet industry in Canada, and even specifically in Manitoba, that makes the demand around the world so high?
Ms. Wood: It’s interesting that you asked me that, senator. I just had a conversation today. It goes back to its heritage. Canada is world-renowned for its woodworking skills. Our country was founded on lumber.
I know that we have an excellent reputation across the world. We were in Manitoba a year ago touring one of those very large cabinet manufacturers, a family-owned business, and it has been in business for generations. But, sadly, that company is facing significant challenges right now because over 50% of what they manufacture is exported to the U.S. They are now facing these tariff challenges, which is making it increasingly difficult for them.
Does that answer your question, senator?
Senator Adler: Sure does. Just all the very best from all of us to all of your hard-working members.
Ms. Wood: Thank you very much. I’ll pass that message along.
The Chair: Thank you.
Senator Gignac: I’m just curious to see what your members are thinking because the federal government’s strategy at the beginning was dollar for dollar. It was a strategy of counter tariffs. I think they realized pretty quickly that when you have a partner that is 10 times bigger than you, you will not survive with such a strategy. That is basically what we have seen: the removal of the counter tariffs. It is 20% of our GDP that is exported to the U.S. It is only 2% of their GDP for the whole U.S. economy. Now the strategy is to play the clock, do nothing and wait, but that creates uncertainty.
Some folks are now starting to mention, “Why not accept a 10% tariff like the U.K. and just remove it?” Is uncertainty the worst-case scenario, or is it 10% tariffs or 15% tariffs? Has there been any discussion like that among your membership that at some point — is it play defence or play offence?
Mr. Champagne: Construction is in a unique place when it comes to the tariff question. My members are builders, and they tell me all the time, “We’re going to build whatever we are asked to build.” Whether it is adding layers of complexity for a net‑zero strategy or by procurement, as long as it’s what’s requested in the contract, they’ll do it. When it comes to tariffs, certainty is much more important than the value because if there is a stable 10%, they’ll factor that in the price. The owners of the construction project are the ones footing the bill, which often is taxpayers in the case of municipalities and provinces and the federal government. Ultimately, the economy can sustain negative pressure out of that.
To answer your question specifically, for us, uncertainty is a much bigger problem than the actual value.
I will say, however, as we are now talking about CUSMA, I want to remind you how essential the current provisions of CUSMA are to sustain the supply chain that we have in place. I have in front of me a list of the top highest inputs for the construction industry that are dependent on trade. I’m happy to share that later with the committee.
Out of that list, 8 out of 10 are currently covered by CUSMA, which means they have no tariffs because CUSMA is in place. If that were to end in the near future, most of these would now be tariffed at a high level. We are talking about goods here. I will share an example. Number one is electrical equipment and components, with $5.5 billion in imports, which represents 71% of all the equipment we use in buildings. If that were tariffed from one night to another, it would be a significant challenge for construction to catch up that price and for owners to stomach the bill.
Senator Gignac: Thank you. Any other thoughts or reactions?
Mr. Osterndorff: Uncertainty is a major component of this. Whether it is construction or agriculture, the planning goes out months ahead to get their products in place. The ability for our customers to plan their business and understand where they’re going to be today is very difficult when you’re not sure where the tariffs are at. I would think uncertainty is the number one concern of everyone right now, and that goes right down to the consumer.
Ms. Wood: In our industry, the average profit margin is below 10%. It’s an industry that requires a lot of infrastructure to operate. We have had discussions around what would be an acceptable tariff with the U.S. Obviously, zero is the answer. But with such low profit margins, as you can imagine, for the companies currently dealing with 25%, it has put them in a very difficult financial situation.
What’s palatable? I can’t speak for the industry because I haven’t gone out and asked that question yet, but recognizing that we may be facing some type of tariff, we will need to have those discussions to see what is manageable.
Senator Gignac: Of course, we don’t know what the Canadian dollar’s reaction will be. If the Canadian dollar declines by five cents — we cannot speculate, and we hope that CUSMA will be renewed and there will be no tariffs.
In your case, in your industry, is it significant or anecdotal for members who have plants on each side of the border? If you have 25,000 jobs, it will be hit in a significant way with any tariff, but is it the case that for some companies or many companies already operating on both sides of the border, they will, of course, lay off in Canada, but the company will continue to survive and invest?
Ms. Wood: Some companies do operate on both sides of the border. Some companies are actually looking at opening up operations south of the border to manage the situation because they’ve got long-standing contracts in the U.S. I haven’t heard of anybody uprooting in Canada and moving operations purely into the U.S. I would not be surprised to see that, to be honest with you, because we have some members that export 90% of their goods into the U.S. You can imagine right now it’s very difficult for them. Does that answer your question?
Senator Gignac: Yes, it seems to be the objective of Mr. Trump to create enough uncertainty that people will move to the U.S. This is exactly what he’s doing: creating uncertainty within Canada. That’s what he basically mentioned, and this is the effect I see. But I was curious to see what your membership is thinking about this: Is it better to have this kind of uncertainty, or is it better to maybe give up a 10% tariff at the end of the day if we have a deal, and the Canadian dollar will probably be four or five cents lower, and that’s it? I know that some people are starting to think about that possible option.
Ms. Wood: Yes, they definitely are, and they’re in survival mode. These companies that want to stay in business will do what they have to do to stay in business. If that means looking at operations in the U.S. and opening up a subsidiary or whatever it might be, they will do it. If they have the resources and the will and it’s worth their effort to do it, they will do it.
The Chair: Thank you. We’ve come to the end of this hearing. On behalf of the committee, I would like to thank Brian Osterndorff, Sandra Wood and Louis-Philippe Champagne for being with us today and for your very compelling testimony. We really appreciate it. This is obviously a big issue. It’s not one that’s going to go away any time soon. So we may be calling on you again to enlighten us with your commentary. Thank you.
Colleagues, we will reconvene tomorrow morning at 10:30 a.m. in this room to do something completely different, and that is to discuss the situation in Cuba for the first panel and the situation in Venezuela for the second panel.
(The committee adjourned.)