Nearly half of Canadian companies planning to move operations or investments to the U.S. to thwart President Donald Trump’s looming tariffs, says KPMG.

A KPMG in Canada survey of 250 business leaders found that 48% plan to shift investments or set up production in the U.S. to reduce costs and offset the effects of a trade war.

“The new U.S. administration’s economic and trade policies are having huge ripple effects in Canada and around the world,” said Lucy Iacovelli, managing partner of KPMG’s Canadian tax and legal business segment. “There are important steps that Canadian businesses can take to prepare for trade disruption and higher costs and build resiliency.”

With escalating trade tensions, 85% of business leaders believe Canada should retaliate against U.S. tariffs with its own tariffs, while 82% support a targeted, dollar-for-dollar response.

Nine in 10 respondents also urge the federal and provincial governments to eliminate inter-provincial trade barriers, reform the tax system, and promote domestic production to strengthen Canada’s economy. Ottawa and the provinces and territories have already pledged to do. Many Canadian business groups have issued calls for such action.

“Our poll findings reveal that Canadian business leaders believe Canada must stand firm even if it means being caught in the crossfire,” said Benjie Thomas, KPMG in Canada’s CEO.

In addition to seeking the removal of inter-provincial trade barriers, companies want Ottawa and the provinces to reform the tax system, provide incentives to onshore, and encourage Canadians to adopt a Buy Canadian strategy.

The survey also highlights growing economic concerns, with 80% of business leaders bracing for a recession. Furthermore, 56% indicated that they would be forced to lay off employees if tariffs were imposed, while 80% support government income assistance to help affected workers.

KPMG’s findings suggest that trade uncertainty is also impacting corporate investment decisions, with 71% of firms delaying capital expenditures until there is more clarity on trade relations. Additionally, 58% of businesses are postponing merger and acquisition activity for at least six months.

These findings are similar to those of Altus Group and other organizations.

The KPMG survey underscores the broader impact of tariffs on Canada’s economy and competitiveness. While 81% of respondents are willing to endure the short-term pain of retaliatory tariffs, they stress the need for long-term solutions, including tax reform and incentives to keep businesses in Canada.

“No matter when or if U.S. tariffs or tax cuts take effect, now is the time to be proactive and understand your exposure and develop mitigation strategies,” Iacovelli added.

Last week, Montreal-based trucking giant TFI International announced its intention to incorporate in the U.S., following a move by Brookfield Asset Management, which relocated to New York to improve its standing on U.S. stock-market indices and bolster its stock price. Pending shareholder approval, TFI could complete its move within nine to 12 months.

The Globe and Mail reported that 70% of TFI’s operations are based in the U.S., along with just under half of its investors.

“I really believe that the U.S. is the best place to be in the world in terms of business,” Alain Bédard, the company’s CEO told analysts while expressing a strong appetite for acquisitions south of the border on a conference call.

“I feel really good about this U.S. economy and I feel really that those guys will do a great job – the new administration. So to me, it’s time to invest in the U.S.”

However, the Caisse de dépôt et placement du Québec (CDPQ), one of TFI’s biggest shareholders, has balked at the plan to incorporate in the U.S.

“The company did not inform us of its intentions, and we will express to them our displeasure,” Caisse spokeswoman Kate Monfette said in an e-mailed statement to the Globe. “Quebec’s interests are always at the heart of our priorities as a shareholder.”

Toronto-based Barrick Gold also said last week that it is considering a move to the U.S., as did Okotoks, Alta.-based trucking and logistics giant Mullen during an earnings call with analysts. Mullen is a TFI rival.

“If Canada doesn’t get its act together – and by this I mean the politicians and Canadians – to say, ‘We’ve got to invest and get capital coming into Canada,’ then we’re going to turn our attention to the U.S.,” Murray Mullen, the company’s chairman and top executive, said on the earnings call.

The KPMG findings indicate that most Canadian firms exporting to the U.S. anticipate significant disruptions, prompting strategic shifts in investment and operations.

Pictured: TFI International leased logistics facility in Dartmouth, N.S.

Photo: East Port Properties