It’s a gloomy moment for United States-Canada relations and the overall health of Western Hemisphere trade, and companies sourcing and selling across North America shouldn’t count on the sun coming out anytime soon, according to Jonathan Todd, co-lead of the transportation and logistics practice at Benesch Law.

According to the trade counsel, the recent tit-for-tat trade actions undertaken by both Washington and Ottowa have served to illuminate the persistence of a trend that stands to continue over the coming months. “It’s very dark, the time that we’re in, but in some ways, we’ve been here before,” he said.

One need only look to very recent history—the past year and a half, to be precise—for a roadmap of potential future upheaval and the mitigation tactics importers and exporters stand to employ moving forward.

Companies began taking a restrained approach to new investment in sourcing from Mexico and Canada in early 2025, following months of threats from President Donald Trump. Todd said clients that had planned capital investments nixed projects because of the escalating tariff threats and the prospect that the value of those investments would be hollowed out by new tariff burdens.

“People did go pencils-down on investment, which was the entire objective, if you will, of this trade strategy,” he said. Trump’s tariff-slinging made companies less, not more, likely to put their faith in a North American supply chain, which is inextricably intertwined across a number of industries.

“If you are a producer that that did plan on significant investment cross-border… it’s hard to see how this ends in a way that gives you a great deal of confidence,” he said of the current state of play. “That doesn’t mean that you’re holding off forever, but I think that there’s good reason to pause investments for the time, just like there was in 2025.”

Companies should brace themselves for more trade turmoil and heightened compliance requirements moving forward, he believes. One need only look to the overall state of U.S. trade to see the scope of the troubling picture.

Two of the top three U.S. trading partners—Canada and China—now represent “the most difficult countries to source from or sell into from a trade policy perspective,” he said. “I think that that’s significant. These are not minor trading partners with underdeveloped relationships—these are very serious trading partners where we have probably the greatest levels of investment and an intertwined nature of business.”

“It’s very impactful. It’s very meaningful. It has real consequences to companies and citizens,” he added.

Twenty billion dollars—the value of the goods targeted by bilateral U.S. and Canadian tariffs—is “relatively speaking, a small portion of cross-border trade,” Todd said, “but if you’re reliant on it, that’s serious.”

As such, companies are doubling down on the strategies they’ve adopted. “The broader supply chain proceeds with the lessons learned from the past: Supplier diversity, flexibility of supply chains, the ability to internalize or pass on supply cost shocks, and refining awareness around trade compliance remains valuable.”

Most U.S. fashion companies source from a dozen or more production hubs across the globe, having learned over the past decade that a China-plus-one portfolio needed to evolve into a China-plus-many roster. Diversification has also become necessary for trading partners that have long counted the U.S. as their biggest export market. “Canada’s a perfect example of a country very clearly and vocally exploring its own trade diversity, just like U.S. companies that that import supply are looking at their trade diversity and looking for suppliers from different regions… to help manage risk and supply chain shock.”

“It drives home the fact that the game has changed in many ways, and the idea of a hegemonic North American trading bloc is further off in the distance than it was even recently,” he added.

Understanding the machinations of the current administration and predicting its plans is too tall an order. But that doesn’t mean companies can’t act, Todd said. “We need to expect that the landed cost of goods will be higher than it was in the past, and that trade will be more volatile than it was in the past, and will continue to be so.”

There may be legal challenges, of course, to the Section 338 tariffs employed by the Trump administration against Canada, as there were to the sweeping International Emergency Economic Powers Act (IEEPA) duties ultimately invalidated by the Supreme Court in February. However, “the broader takeaway for supply chain professionals is that the issue of tariffs is not going away,” Todd added. “The issue of a compliance landscape that changes daily is not going away.”

There are two prevailing sources of anxiety among the trade lawyer’s clients. “The number one supply chain concern that I hear is the challenge of maintaining awareness, and the second is the challenge of dealing with landed costs,” he said. On the awareness side, it’s difficult for procurement, logistics and compliance professionals to stay abreast of “what is restricted, what has a higher duty burden, what has increased risk, and what are the safer countries or products to source.”

Meanwhile, cost is something they can try to prepare for but can’t truly mitigate. “The net effect of tariffs is that things cost more,” he added. “That’s how tariffs work.”

The government’s aggressive enforcement of its trade laws is something companies should be taking very seriously, he believes. “I see the investigations that are occurring. I see the civil penalties that are being raised against U.S. companies that import goods and are maybe not are as buttoned up as they could be on country of origin, USMCA application or effective duty rate,” he said. “If companies are not addressing it squarely today, they’ll need to in the near future because as these tensions rise, the U.S. government fully intends to enforce its policies and objectives, even if that means enforcement against domestic companies.”

Those that handle that challenge aggressively stand to come out on top. “I have clients who have built out standing war rooms on their campuses for dealing with tariff and trade fluctuation. Clients have added new software, including AI-driven platforms, to watch for the accuracy of tariff codes, of duty rates, to manage inbound supply, and to understand as best as possible country of origin,” Todd said.

Most companies are doing the best they can with the resources they have, but the results are still a mixed bag and the learnings continue. “The reality is that even a very large, well-established company can find itself in challenging times because trade compliance is as complex as it is, and is moving as quickly as it is,” he added.