U.S. Tariffs - Municipal Actions and Considerations
April 3, 2025
Heading into April, tariffs continue to be the main topic of conversation on the news, at the grocery store, and in Council chambers. Federally, Prime Minister Carney has announced an election for April 28th, with all political parties focusing on bringing in a new mandate to combat U.S. tariffs. Provincially, Premier Ford’s newly elected Cabinet is set to unveil new measures when the legislature resumes on April 14th. Locally, municipalities have begun to explore the options available for “Buying Canadian” and other measures to support residents and businesses.
A first step for many Ontario municipalities is proposing changes to their procurement policies and by-laws, but considerations must be made to determining Canadian companies, legal limitations, and broader impacts to residents.
Limitations to Procurement Changes
Municipalities must adhere to the Discriminatory Business Practices Act, which prohibits discrimination on various factors including geographic location. Currently, the Act restricts municipalities from showing preferential treatment to local suppliers. However, the Act includes an exemption to allow “discriminatory” business practices in accordance to federal or provincial policy. Should the other levels of government implement policies to promote Canadian businesses, municipalities may develop similar policies.
Municipal procurement practices have obligations under various trade agreements. In particular, the Canadian Free Trade Agreement (CFTA) and the Canadian-European Union Comprehensive Economic and Trade Agreement (CETA) impose requirements for municipal procurement of goods, services, and construction. Trade agreements can contain clauses that government agencies treat foreign suppliers the same as domestic suppliers based on threshold amounts. A list of Canadian treaties with thresholds can be found on the Government of Canada website.
If the procurement is under the identified thresholds, municipalities do not have to adhere to these trade agreements but will still need to follow their procurement policy or by-law. Some municipalities have updated their procurement by-laws, which can include increasing their low value thresholds to allow for single sourcing to domestic suppliers and/or increasing their Medium Value Acquisition and High Value Acquisition to align with CFTA thresholds. An increase to acquisition thresholds will enable municipalities to reach out to a more diverse set of suppliers. Examples of municipal procurement policies with updated thresholds can be found below.
What Does it Mean to “Buy Canadian”?
On the outset, proposing to “Buy Canadian” appears to be an easy solution, but the free flow nature of North American economies has made it difficult to define what constitutes a Canadian company. A company can be headquartered in Canada but import goods and services from the U.S. Likewise, companies based in the U.S. can have offices within Canada that only employ Canadian staff for Canada-based projects.
Municipalities are now reviewing their current business vendors and contracts to analyze the impact of restricting to buying Canadian. Some municipalities are taking it a step further to reach out to vendors to understand where their goods are sourced from, and asking procurement services to limit their searches to Canadian companies where possible.
Development of a “Buy Canada” approach will need to include cooperation and disclosure from suppliers as the current Canadian standards do not require the country of origin from products to be identified.
However, municipalities are unable to fully divest from U.S. products and suppliers. For some products, like I.T. services, there are no Canadian-made alternatives. Similarly, municipalities must consider the financial impact to residents. Should the U.S. impose its full set of tariffs, residents will bear the increased cost on most daily goods and services. Municipalities have to determine whether a “Buy Canada” approach is worthwhile at the detriment of the taxpayer. Municipalities should consider careful language when adopting a “Buy Canada” approach to ensure these considerations are in place.
Other Municipal Action
Beyond procurement, municipalities are taking proactive measures to address the threat of U.S. tariffs. Many municipal websites now include a Tariff Response/Resource page that provides updates on municipal initiatives, news updates, links to local businesses, and information for financial aid for businesses.
Municipalities are also collaborating with neighbouring municipalities and local economic development offices to develop solutions unique to their area. In Niagara Region, “Team Niagara” was developed which includes local economic development officers and external partners such as Chambers of Commerce and industrial associations.
Within municipalities, internal teams are being developed to facilitate key deliverables. These internal teams are often led by Finance staff and can include procurement, legal, economic development, and more.
In the City of Toronto, staff have proposed an Industrial Property Tax Deferral program, which allows industrial property owners to defer tax payments from June 1-November 30, 2025. The program would be an application-based process with approval criteria based on financial impact assessments.
Finally, municipal staff are determining the potential financial impacts of tariffs. Due to the intertwined relationship between Canada and the U.S. goods and services, this can be a very large undertaking. As a first step, municipalities can consider the approach taken by York Region, where Council has directed staff to develop a “recession contingency budget” for 2026, using pandemic budgets as benchmarks.
As the threat of tariffs looms, municipalities are working behind the scenes to develop contingencies and policies to support residents and businesses. MFOA will continue to monitor the impact of tariffs and collect resources that can assist municipalities.