The six-year joint review of the Canada-United States-Mexico Agreement began on July 1, 2026, and the United States did not agree to the 16-year extension that would have given exporters a long runway of certainty. The agreement remains in force, but the question of what the North American trade regime will look like over the life of a typical acquisition is now open in a way it was not before.

One day later, on July 2, Premier Danielle Smith and Prime Minister Mark Carney announced in Calgary a proposed pipeline from Alberta to the British Columbia coast, with Alberta and Canada as equal majority partners, a meaningful Indigenous equity stake, and Pembina Pipeline holding a 10% economic interest once construction begins. The cost was estimated at $35 billion or more, with funding details still to be negotiated. Two announcements in two days captured both the province’s dependence on the U.S. market and the effort to reduce it.

For anyone buying or selling a business in Alberta, trade exposure has become a diligence workstream in its own right. U.S. Section 232 tariffs on steel, aluminum and copper ranged from 10 to 50% on full value as of April 6, 2026. Canada removed its counter-tariffs on CUSMA-compliant U.S. goods on September 1, 2025 but kept them on U.S. steel, aluminum and autos. Those measures shape the margins of many Alberta manufacturers, fabricators, distributors and service companies.

This article sets out how deal teams should test trade exposure: revenue by destination, tariff pass-through, CUSMA rules of origin, supply-chain resilience, and the purchase-price protections that translate the findings into contract terms. It also notes the alternative that Bill C-30, enacted June 18, 2026, made permanent for owners considering an employee sale.

Key Takeaways

• The CUSMA review opened July 1 without U.S. agreement to a 16-year extension, so the trade regime for the life of a deal cannot be assumed
• Revenue by destination and tariff classification should be mapped line by line, not estimated from the top down
• Rules-of-origin compliance is a diligence item with real value, since CUSMA-compliant goods have been treated differently from non-compliant goods
• Tariff pass-through and supplier diversification determine whether a target’s margins are resilient or merely recent
• Purchase-price protection through earn-outs, escrows, specific indemnities and MAC definitions should reflect trade risk explicitly

Two Announcements, One Message

The CUSMA review is a scheduled feature of the agreement, but the absence of U.S. agreement to extend changes its character. Rather than a formality, the review has become a negotiation, and exporters cannot assume the tariff treatment they enjoy today will hold through the next several years. For a buyer underwriting a five-year hold, that uncertainty belongs in the base case rather than in a footnote.

The pipeline announcement builds on the Alberta-Ottawa memorandum of understanding signed November 27, 2025, which set out a framework for a new West Coast oil pipeline, carbon capture, grid expansion and faster approvals, with an application to the Major Projects Office by July 1, 2026. The proposed structure, with two governments as equal majority partners and an Indigenous equity stake, is unusual and the funding remains to be negotiated. Even on the most optimistic timeline, the diversification it promises lies years away.

The gap between those horizons is the point. Between May 2024 and April 2025, the United States still took about 93.8% of Canadian crude exports, despite the Trans Mountain Expansion adding 590,000 barrels per day of capacity. Deals closing in 2026 and 2027 will live under the current exposure, not the future one, and diligence should be built accordingly.

Mapping Revenue by Destination

The first task is to establish, customer by customer and product by product, where the target’s revenue actually goes. That means ship-to country rather than billing address, tariff classification for each product line, the trade terms that determine who acts as importer of record, and the amount of duty actually paid or absorbed over the past two years. Management estimates of U.S. exposure are often wrong in both directions.

Indirect exposure matters as much as direct. An Alberta machine shop that sells only to Canadian customers may depend on customers who export to the United States. An oilfield service company’s revenue is tied to producers whose crude is priced against U.S. benchmarks and sold predominantly into the U.S. market. Diligence should trace at least one step beyond the target’s own invoices to understand where the demand originates.

With the map built, the buyer can run sensitivities. What happens to EBITDA if tariffs on the target’s main product line rise, fall or are removed? How much of the past two years’ margin reflects temporary pricing during periods of tariff volatility? Those scenarios should be compared against the normalized EBITDA on which the purchase price is based, and any gap should be addressed in structure rather than ignored.

Rules of Origin and CUSMA Compliance

Compliance with CUSMA rules of origin has carried real economic value since early March 2025, when CUSMA-compliant goods were exempted from the U.S. tariffs that took effect that month, and again when Canada removed counter-tariffs on CUSMA-compliant U.S. goods in September 2025. A target that can document the origin of its products has been paying less duty than one that cannot, and that advantage is embedded in its margins.

Diligence should therefore examine certifications of origin, supplier declarations, bills of materials and the records supporting each claim. A target that has claimed preferential treatment without adequate documentation carries a contingent liability for duties and penalties that a buyer will inherit. Conversely, a target whose products could qualify but has not done the work presents an opportunity that a buyer can price in or capture after closing.

Pass-Through, Suppliers and Resilience

Tariff pass-through

Whether a target absorbed tariff costs or passed them to customers is a test of its competitive position. Contracts with explicit tariff-adjustment clauses, price increases that held without volume loss, and low customer concentration all indicate pricing power. Margins that were maintained only by cutting service, deferring maintenance or accepting slower payment terms indicate a business that is more fragile than its recent results suggest.

Supply-chain diversification

On the cost side, diligence should identify inputs sourced from the United States and elsewhere, the availability of alternative suppliers, and the lead time and cost of switching. Canada’s remaining counter-tariffs on U.S. steel and aluminum affect fabricators and equipment builders directly. A target that has already qualified alternate suppliers, or that carries inventory sized for disruption rather than for efficiency, has bought resilience that is worth paying for.

Currency and working capital

Trade exposure also runs through the balance sheet. Inventory built ahead of tariff dates, extended receivables from U.S. customers and hedging positions in the Canada-U.S. exchange rate all distort working capital. Buyers should set the working-capital target on a normalized basis that strips out those effects, and sellers should be prepared to explain them rather than let them be treated as permanent features of the business.

Purchase-Price Protection

The findings from diligence are only useful if they are translated into the purchase agreement. Earn-outs tied to post-closing margins rather than revenue allow a buyer to pay for resilience that is demonstrated rather than promised. Escrows and holdbacks sized to the tariff sensitivity of the business provide a source of recovery. Specific indemnities for customs and origin matters allocate a known risk to the party best placed to control it.

Material adverse change clauses deserve particular attention. Buyers will want tariff and trade-policy changes to be capable of triggering the clause; sellers will argue they are general economic conditions that affect the whole industry and should be carved out. Where the parties agree on a carve-out, the buyer’s protection has to come from elsewhere in the agreement, and outside dates and financing conditions should be drafted with the CUSMA review timeline in mind.

Valuation itself should respond to the analysis. Periods in which tariffs inflated or deflated margins should be normalized, and the multiple applied to normalized earnings should reflect the durability of the trade position. Sellers with strong origin documentation, diversified customers and demonstrated pass-through will attract a premium from buyers who have done this work; sellers without them will see it expressed as a discount or as deferred consideration.

Positioning for Deals in the Second Half of 2026

Sellers who expect to go to market in the coming year should build the trade file now: destination data, origin documentation, contract terms and a clear account of how the business managed the tariff environment since early 2025. That file turns a diligence risk into a selling point. For owners who find third-party buyers discounting heavily for trade exposure, Bill C-30’s enactment on June 18, 2026 made the $10 million Employee Ownership Trust exemption permanent, which offers an alternative path on a timeline of the owner’s choosing.

Buyers should price the regime they can see rather than the one they hope for. The Bank of Canada held its policy rate at 2.25% on June 10, with the next announcement scheduled for July 29, so financing conditions are stable and the mid-market remained active through 2025. Capital is available for well-structured deals; the discipline lies in making sure the structure reflects the trade risk the diligence uncovered.

At Pragma Capital, we regard trade exposure as a permanent element of Alberta deal diligence rather than a passing concern. The CUSMA review and the proposed pipeline point in different directions on different timelines, and transactions have to be built for the period in between. Buyers and sellers should work with their legal, customs and financial advisors to make sure the purchase agreement reflects what the numbers actually show.