Canadian companies tighten spending as geopolitical tensions rise, report

Canadian companies are tightening spending as they respond to heightened geopolitical tension and shifting trade dynamics, according to new data from Marsh McLennan. 

A survey conducted during a recent webinar for Canadian risk and finance professionals found that 61% of organisations are focusing on cost control as their primary response to uncertainty. Other common strategies include sourcing from alternative suppliers (47%) and undertaking scenario planning and testing (43%). 

“Organizations could be doing more to understand and model the long-term impacts of these policy changes on their bottom lines,” said Lexie Kindbom, chief client officer at Marsh Canada. 

The webinar, “Navigating Geopolitical Risk and Uncertainty: The Impact of Changing Trade Policies on Canadian Companies”, brought together panellists from Marsh McLennan’s four business units – Marsh, Mercer, Oliver Wyman and Guy Carpenter – who discussed the economic and risk implications of changing trade policy. 

James Miller, partner at Oliver Wyman, said volatility in global markets is delaying business activity.  

“Daily changes are paralysing trade, impacting stock and bond markets, and slowing international commerce. Canadian businesses are deferring decisions due to fears of potential changes and market volatility, leading to a slowdown in M&A activity, lending and capital expenditures,” Miller said. 

Tariff-driven risk is also contributing to increased capital costs, according to Trevor Mapplebeck, strategic advisor at Marsh Canada. He said companies should reassess their insurance capital strategies and consider alternative risk financing options to improve cost efficiency. 

Despite rising trade-related risks, only 25% of companies surveyed reported mapping their exposures. Dan Kotwinski, head of advisory at Marsh Canada, warned that limited visibility into supply chains could leave firms vulnerable to disruptions.  

“Our Sentrisk platform found that 65% of organisations have at least one hidden bottleneck that is critical to their operations,” he said. 

Looking ahead, Canadian firms may consider reducing reliance on the US market and pursuing broader trade diversification.  

Alexandre Lefort, partner at Oliver Wyman, pointed to Canada’s 15 free trade agreements covering 51 countries.  

“Companies should manage tariffs effectively but also reassess their market strategies in light of broader global opportunities,” he said. 

What are your thoughts on this story? Please tell us below.