Supply chains, false advertising rules challenge companies looking to leverage 'Buy Canadian' calls

Lawyers say clients are increasingly interested in highlighting their products' Canadian roots

Supply chains, false advertising rules challenge companies looking to leverage 'Buy Canadian' calls
Helen Fotinos, Melissa Tehrani

As the White House continues to issue a quick-moving stream of tariff updates, lawyers working with Canadian companies are increasingly fielding questions about how to leverage a consumer movement to boycott US products and “buy Canadian” instead.

However, lawyers say the answer is not always straightforward, given near-daily tariff updates, Canadian and US supply chain integration, varying labelling rules for different Canadian products, and tensions between manufacturers and retailers about whether to highlight product ties to Canada.

Since US President Donald Trump announced plans to levy a 25 percent tariff on Canadian and Mexican goods in November, the White House has made multiple updates to the tariffs’ terms and rollout dates. In early February, Trump paused plans to levy tariffs on both countries for 30 days after Prime Minister Trudeau and Mexican President Claudia Sheinbaum committed to improving border security, among other concessions.

On Monday, however, Trump signed orders imposing 25 percent tariffs on all steel and aluminum imports, including those from Canada. The tariffs are set to take effect on March 12. Trudeau said Tuesday that Ottawa would work to convince Trump that the tariffs will hurt both countries but added that if the approach failed, the US can expect a strong retaliatory response.

The fast-moving changes have left companies across Canada scrambling to brace themselves for the coming tariffs. Because there is still uncertainty about how the new rules could play out, many companies are looking at their supply chains, reviewing contracts, and drawing up contingency plans while they wait for concrete updates, says Helen Fotinos, a partner at Dentons who leads the firm’s national franchising and distribution group in Canada.

“A lot of people are viewing [the tariffs] as a negotiation tactic, so they're not sure if they’ll actually translate into changes that will require them to pivot on their supply chain or their investments,” Fotinos says. “There's a little bit of a ‘wait and see’ because these types of swings have real money and real consequences behind them.”

Fotinos adds that for many companies, particularly those with investments in multiple jurisdictions, “it’s just not feasible – financially or from a business perspective – to be shifting based on what the latest [post] is on Truth Social.”

However, Fotinos says there is one aspect of their business that companies can more easily adjust: their marketing.

After Trudeau and provincial leaders encouraged Canadians to buy domestic goods to blunt the impact of potential retaliatory tariffs against the US, a growing movement to “buy Canadian” and eschew US products has taken hold among consumers. According to Melissa Tehrani, a partner at Gowling WLG who leads the firm’s national advertising and regulatory group, many clients have reached out “about whether they can make ‘Made in Canada or ‘Product of Canada’ claims, and what the thresholds would be in order to support that type of claim.”

Tehrani says that many of these inquiries were spurred by retailers, which are pushing manufacturers to ask “for further information on whether or not they can identify their products as having Canadian roots in their retail stores.”

Fotinos notes that many retailers are prominently displaying Canadian products in stores or on their websites, or rewarding consumers for buying domestic goods through discounts, promotions, and loyalty programs. In recent weeks, she says, Dentons has also advised clients on whether and how they can legally label their products as domestic goods.

This process can be tricky to navigate, partly due to the global nature of many supply chains. Fotinos cites a car as an example, which might have “components from Mexico, US, Canada, Germany. It crosses the border six or seven times before it's delivered to an end consumer.

“Supply chains are so integrated, it's difficult to parse that out and classify a product as ‘Made in Canada’ or ‘Made in the US,’” she says.

Another challenge is that there is no universal threshold that products must meet to earn the “Made in Canada” or “Product of Canada” designations. The Competition Bureau enforces the Consumer Packaging and Labelling Act with respect to non-food products, while the Canadian Food Inspection Agency enforces the CPLA with respect to food products.

Tehrani notes that both federal agencies have guidelines on the thresholds that products have to meet to be designated as “Made in Canada” or a “Product of Canada,” which are “really intended to help businesses develop strategies to ensure compliance with the false and misleading representation provisions under the [Consumer Packaging and Labelling] Act.”

For Tehrani, however, perhaps a trickier issue is navigating the tension between retailers eager to leverage the “Buy Canadian” movement on the one hand and manufacturers looking to downplay their ties to Canada on the other.

“Because of how deeply integrated the US and Canadian economies are… the tariffs have sparked a unique dynamic in the market where some companies with ties to both Canada and the US are downplaying their Canadian roots,” Tehrani says, adding that many of those companies are afraid of “being caught in the crossfire” of trade war tensions.

Tehrani cited the concept of “green hushing,” referring to companies that deliberately say little about their sustainability goals for fear of being accused of greenwashing.

“I would refer to this as ‘Canadian hushing’ – shying away from highlighting your Canadian roots because you're deeply tied to the US,” she says.