On February 1, 2025, the United States issued an executive order imposing tariffs of 25% on Canadian goods, with a lower rate of 10% on energy. Two days later, on February 3, the measure was paused for 30 days. Separately, tariffs on steel and aluminum have been announced for March. At this point, Alberta businesses do not know whether the broad tariffs will take effect when the pause ends, in what form or for how long.

Uncertainty of this kind is a balance sheet problem before it is a trade problem. Tariffs, if imposed, would affect pricing, margins, receivables, inventory values, currency exposure and the willingness of customers on both sides of the border to commit to orders. Each of those effects lands on the working capital of the business and on its ability to satisfy the terms of its credit facilities.

The interest rate backdrop offers some relief. The Bank of Canada cut its policy rate to 3.00% on January 29, 2025, its sixth consecutive reduction since June 2024, and its next announcement is scheduled for March 12. Lower borrowing costs provide room to carry additional liquidity, but they do not remove the need to prepare.

This article sets out a practical framework for Alberta business owners to assess their exposure, build liquidity, review concentration risk, document CUSMA compliance, manage currency and engage their lenders in scenario planning before the pause expires.

Key Takeaways

• The U.S. executive order of February 1, 2025 imposed 25% tariffs on Canadian goods and 10% on energy before being paused for 30 days on February 3
• Tariff exposure is a working-capital issue that affects pricing, receivables, inventory and covenant compliance, not only a trade policy issue
• Liquidity buffers and committed working-capital lines arranged before a shock are cheaper and more reliable than those sought during one
• Customer and supplier concentration, CUSMA compliance documentation and currency exposure should be reviewed line by line
• Lenders respond best to borrowers who present scenario analysis and a plan, so open the conversation before the pause ends rather than after

What Has Been Announced and What Has Not

The February 1 executive order set a 25% tariff on Canadian goods entering the United States, with energy products subject to a 10% rate. The pause announced on February 3 delayed implementation for 30 days but did not withdraw the order. The separate announcement of tariffs on steel and aluminum, scheduled for March, adds a second layer of exposure for Alberta fabricators, manufacturers and their customers.

What has not been settled is at least as important. The scope of any exemptions, the treatment of goods that qualify under the Canada-United States-Mexico Agreement, the duration of the measures and the nature of any Canadian response all remain open questions. Owners should avoid building plans around a single assumed outcome.

For Alberta, the energy rate of 10% rather than 25% reflects the province’s role as a major supplier of crude oil and natural gas to the United States. That lower rate matters, but it does not eliminate the exposure of producers and the services companies that depend on them, and it offers nothing to the agricultural, manufacturing and forestry exporters that would face the full rate.

Building Liquidity Before It Is Needed

The first defence against a trade shock is cash. A business that enters a period of disruption with several months of operating expenses in liquid reserves has time to adjust prices, renegotiate with suppliers and find new customers. A business that enters with a fully drawn operating line and thin reserves must make those decisions under pressure, usually on worse terms.

Committed working-capital lines are the second layer. An operating line that has been formally committed by the lender for a fixed term cannot be reduced or cancelled at the lender’s discretion during that term, unlike a demand facility. Owners should review whether their lines are committed or demand, whether availability is sufficient for a period of slower collections and whether borrowing base definitions would exclude receivables from U.S. customers affected by tariffs.

The cost of holding extra liquidity has fallen with the policy rate at 3.00%. Carrying an undrawn line or a modestly larger cash balance is a relatively inexpensive form of insurance, and it is far cheaper than seeking emergency financing after a disruption has begun. Lenders are considerably more receptive to increasing a facility for a healthy borrower than for one already in distress.

Concentration Risk on Both Sides of the Ledger

Tariffs expose concentration. A business with a large share of revenue from a single U.S. customer, or from a single product category that would face the full tariff, has a concentrated risk that a lender will immediately identify. Owners should quantify the share of revenue by destination and by customer, and estimate how each would respond to a 25% cost increase at the border.

Supplier concentration matters just as much. Inputs sourced from the United States could become more expensive if Canada responds with measures of its own, and inputs sourced from third countries may be affected by shipping disruptions or by tariff changes elsewhere. Identifying alternative suppliers before they are needed, and understanding the lead times involved, is straightforward preparation.

Diversification takes time and rarely happens during a crisis. The businesses best positioned for the coming months are those that have already begun to build customer relationships in other provinces and other export markets, and those that have documented their supply chains well enough to know where the vulnerabilities lie.

Documentation, Compliance and Currency

CUSMA Rules of Origin

Whether a good qualifies for preferential treatment under CUSMA depends on rules of origin that vary by product. Businesses that have not maintained certificates of origin, bills of materials and supplier declarations should assemble them now. If CUSMA-compliant goods are treated differently from non-compliant goods under any future measure, the documentation will determine which side of the line a shipment falls on.

Contracts and Pricing Clauses

Existing customer and supplier contracts should be reviewed to determine who bears the cost of a tariff. Some contracts are silent, some allocate duties to the buyer and some contain price adjustment or force majeure language that may or may not apply. New contracts should address the question explicitly, and owners should discuss with legal counsel how to draft clauses that share tariff risk fairly.

Currency Exposure

Trade tensions tend to move the Canadian dollar, and a weaker currency partly offsets a tariff for exporters while raising the cost of imported inputs. Businesses with U.S. dollar receivables or payables should review their natural hedges and consider whether forward contracts through their bank would reduce the volatility of their cash flow. Currency decisions should be made with financial advisors who understand the specific exposure.

Scenario Planning With Your Lenders

Lenders across the province are assessing tariff scenarios for their portfolios, and borrowers who bring their own analysis to the conversation will be treated as partners rather than as risks to be managed. A useful scenario set includes the pause being extended, the full tariffs taking effect for a short period and the tariffs remaining in place for a year or more, with the impact on revenue, margins, working capital and covenant compliance calculated for each.

Where a scenario shows covenant pressure, the time to discuss it is now. Lenders can amend covenant levels, provide temporary relief, restructure amortization or increase availability, but every one of those options is easier to arrange for a borrower who has anticipated the problem than for one who has already breached. Waiting until quarter-end reporting reveals a shortfall removes most of the flexibility.

Alberta borrowers should also consider whether federal and provincial institutions have a role. EDC supports exporters with insurance and financing, BDC provides financing and advisory services to Canadian businesses, and ATB Financial has a mandate rooted in the provincial economy. Each may have programs relevant to companies affected by trade disruption, and owners should ask.

Preparation as a Competitive Advantage

The tariff pause has created a window for preparation, and it is worth using. The steps described here, from building liquidity and reviewing concentration to assembling documentation and engaging lenders, are valuable regardless of whether the tariffs ultimately take effect. A business that has done this work is stronger in any environment.

There is also an opportunity dimension. Disruption reshapes competitive positions, and well-capitalized businesses with flexible supply chains and strong lender relationships tend to gain ground when weaker competitors struggle. Owners who have prepared may find acquisition opportunities, new customers and new supplier relationships that would not have been available in calmer conditions.

At Pragma Capital, we encourage Alberta owners to treat the coming weeks as a stress test they can run on their own terms. With the policy rate at 3.00% and the Bank of Canada’s next decision on March 12, financing conditions remain supportive, but the businesses that come through a trade disruption well are those that planned for it in advance and with the guidance of their financial, legal and tax advisors.