On April 2, President Trump signed an executive order imposing new tariffs on all U.S. trading partners. One week later, the president declared a 90-day stay on most of the announced retaliatory tariffs. Since the initial announcement, markets have gyrated as investors grapple with the potential effects on economic growth and corporate profits.
Canadian companies can expect this question to dominate investor attention for the foreseeable future and their communications on the subject going forward will have meaningful implications for market performance. Leadership teams will have to consider how they communicate about this important strategic topic and the most effective channels to convey these messages.
A footnote in the MD&A is not enough
A minor disclosure may meet regulatory needs, but it will not meet the moment. Investors will be looking for proactive, consistent and thoughtful communications through channels such as the earnings press release, conference call script, annual meeting presentation, business outlook and more. Investors will want assurance that the board and management are giving proper strategic consideration to a potentially material issue.
This is a time when the effectiveness of leadership will be measured and evaluated by how they communicate about what the tariffs and shifting economic conditions mean for their companies.
Following is an overview of the announcement’s potential impacts and some thoughts on responses by the Canadian government and implications for clients.
Implications for Canada and Canadian companies
While Canada has largely been spared the worst-case scenario — at least for now — there are broader implications for the global economy that will reflect back on Canada.
Massive tariffs on countries in Asia and Europe will hurt global growth.
Canadian companies that source products and materials from Asia and Europe will see their input costs rise.
The inflationary effect of tariffs will limit the ability of central banks to use interest rate policy to stimulate the economy to restart growth.
The uncertainty of future measures by the U.S. and responses from other countries may cause companies to pause their plans for investment in the near term.
Canadian companies will still be expected to make long-term strategic decisions about investing, growth and new initiatives within their organizations while the trade, political and economic pictures change from week to week.
Adding a layer of uncertainty to all this is the ongoing federal election campaign and the potential for a change in leadership that puts any long-term policy response into question.
Recommendations for your investor communications
The political situation is fluid, with further announcements by President Trump possible at any time. Even if President Trump opts to reduce or reverse tariffs, it is important to consider how your business might be seen in such a context, and the best time to assess this is before a public stakeholder decides to do it for you.
Be clear and strategic in your communication with stakeholders. Misinformation will abound in all directions. This is not the time for silence or an information void.
Be clear on the implications, risks and opportunities created by the current global trade dynamics. Investors will expect your company to be proactive on these points.
Review your communication materials for consistency and to ensure they are appropriate for the current context. Communications should be aligned across channels, relevant and timely.
Ensure your executive leadership team is prepared to speak with substance on the global trade picture in investor communications and ready to answer questions such as:
What are the immediate and longer-term implications for the company’s financial results?
Where will the effects of tariffs be felt — in the supply chain, lower growth, higher inflation or a weaker currency?
Are there opportunities for the company to benefit over time?
What are the strengths that the company can leverage to improve its position?
What actions will the company take to mitigate the effects?
Additionally, given the Trump administration’s scrutiny of DEI language, companies with significant exposure or profile in the U.S. should consider how they speak to those initiatives in their disclosures, whether it be ESG reports or elsewhere, and how that might impact business goals.
How FGS Longview can help
At FGS Longview, our team has expertise across industries with deep experience in crisis communications, integrated communications plans, reputation and scenario analysis.
The team includes former in-house investor relations leaders as well as public affairs experts who bring additional resources to bear on understanding and analyzing the political situation and how it affects your business, and how you can and should communicate to investors.
As a part of FGS Global, one of the world’s largest financial communications and public affairs firms, we offer top-notch talent and advice in U.S. public policy and strategy and insight into how U.S. companies are managing questions of disclosure and DEI.
There is no better organization to support you as you navigate the challenges and opportunities created by this new global trade environment. We would be pleased to discuss how we might assist you in ensuring your investor communications are ready to meet the moment.