One of the maxims of the legal business is to never let a good crisis go to waste. And in the case of Canada’s biggest law firms, trade disputes and chillier relations with the United States have meant a surge of new work from corporate clients—at least for the time being.
Since winning a second term last November, President Donald Trump has trained fire on Canada, imposing new tariffs on Canadian products and musing about annexing the country as the 51st U.S. state. Canada has responded with its own tariffs on U.S. products, a change of prime ministers and a national rethink about the economic relationship with its southern neighbor.
The turmoil is creating a best-of-times, worst-of-times scenario for law firms. On one hand, international trade practices have never been busier as businesses on both sides of the border grapple with uncertainty over the costs and compliance issues related to Trump’s fast-changing tariff policies. “The chaos continues,” said McCarthy Tétrault’s John Boscariol, in a video interview with BNN Bloomberg on April 9. The head of the firm’s International Trade and Investment Law Group, Boscariol said, “as a lawyer practicing in the area of tariffs and trade for decades, this is a completely new environment for us…We’re trying to react on the fly.”
On the other hand, the outlook for corporate transactional practices—once expected to be a bright spot in 2025—has nose-dived. Ongoing trade uncertainty, roiling stock markets and possible recession are unlikely to help law firms any more than their clients.
Unfamiliar Territory
Until the Trump administration’s tariffs, trade between Canada and the United States had been a relatively friction free affair for decades. As the U.S. Embassy in Ottawa noted on its website in a 2010 post, “98% of U.S.-Canada trade flows smoothly.” While occasional trade disputes arose over the remaining 2%, “usually these issues are managed amicably through bilateral consultative forums or referral to World Trade Organization (WTO) or [free trade] agreement dispute resolution procedures.”
Because of this, companies in both countries are largely unfamiliar with import duties or trade-related bureaucracy. And the problems are particularly thorny for clients in areas like the auto industry, where the supply chain relies on a near-constant flow of components moving back and forth seamlessly between the two nations.
While Trump has backed off his blanket 25% tariff on all goods imported from Canada (at least as of this writing), tariffs remain for goods not covered by the Canada-U.S.-Mexico trade agreement (CUSMA), energy products, potash, steel and aluminum, autos and auto parts. Canada has responded with retaliatory tariffs on $60 billion worth of U.S. goods and U.S.-made vehicles and imports. On April 16, the Canadian government issued a six-month reprieve on certain categories of tariffs and surtaxes to give businesses “additional time to adjust their supply chains and prioritize domestic sources of supply.”
Law firms have swung into action in response to the ever-shifting trade picture, advising clients directly, building online hubs to educate corporate leaders and conducting a series of live and streaming events.
At Toronto-based Osler, Hoskin & Harcourt, for instance, partners in the Competition, International Trade and Foreign Investment Group began a two-week road show, holding breakfast events in Toronto, Vancouver, Montreal and Calgary. The events focused on the potential impacts of the tariffs, possible changes to the Canada-U.S.-Mexico agreement and the political impact on the next government and its trade policies.
Dentons Canada, in an April post, nicely summarized the kinds of activities firms are now performing for their clients. They included: assessing the impact of the tariffs and exclusions; “advising on the process for seeking exclusion from or remission of the tariffs and counter-tariffs; [exploring] drawback and other duty relief programs; [conducting] government relations in connection with the tariffs, countermeasures and support for affected business; helping business assess their supply chain options; [dealing with] issues related to the classification and origin of goods; and contractual drafting issues and disputes.”
Looking for Lawyers
A side effect of the burgeoning workload on trade issues is a scramble for talent among Canadian law firms. In April, The Canadian Lawyer reported that “Canada may not have enough international trade lawyers with deep, niche experience to help clients weather a potential automotive tariff war with the United States.”
One veteran trade lawyer who spoke to the magazine said that even with Trump’s decision to pause certain tariff increases, clients in his automotive-focused trade practice mean his workdays “have ballooned to nearly 14 hours as parts suppliers and manufacturers seek guidance on how to prepare and mitigate potential exposure.”
Some firms are responding by moving lawyers from other practices into their international trade groups to help pick up the slack. Lateral partner hiring is also heating up—and is not limited to lawyers practicing in Canada.
On April 1, McCarthy Tétrault hired Vasuda Sinha as a partner in its National Litigation and Dispute Resolution Group. Sinha, who started her career as a litigation associate at Norton Rose Fulbright’s Toronto office, has spent the last 10 years as an international arbitration lawyer in Freshfields’ Paris office.
McCarthy Tétrault said in a press release that the hire is explicitly designed to “reinforce the firm’s expertise in international commercial, trade and investment disputes.” Along with Sinha, McCarthy Tétrault told Canadian Lawyer that its international trade practice now has 10 lawyers practicing full-time, along with 15-20 more from other practices who are providing expertise on specific issues.
A Bounce for Litigation and Bankruptcy Practices?
Trade arbitration and litigation specialists like Sinha may be busy in the year ahead. Disputes among companies over contractual obligations, costs, supply chain disruption and tariff classifications and loopholes could erupt. If, for example, a tariff raises costs beyond the point of commercial viability, one party to a contract may push to terminate the agreement and trigger litigation from the counter-party.
Canadian companies will be required to clearly understand tariff classifications, the origin of their products and the components that go in them, as well as how the product is being valued. “Those are now the key elements to determining how much you’re going to have to pay when the product crosses the border,” Boscariol told BNN Bloomberg.
Higher costs and economic tumult may also help spur another counter-cyclical practice area—restructuring and bankruptcy. In mid-April, the Bank of Canada said it was operating under two scenarios. The first shows a moderate economic expansion if diplomacy works and the tariffs are withdrawn.
The second, however, posits a long trade war that sparks a recession and drives up inflation. The governor of the Bank of Canada said this outcome could lead some exporters into bankruptcy and force Canadians to cut spending. Canadian consumers have already been paring back purchases during the first few months of the year.
Transactional Troubles
In an analysis released in January, PwC predicted that “the global M&A markets may finally be back on an upward trajectory as some of the economic and geopolitical uncertainties weighing on the market over the past couple of years lift.”
And deal activity in the first quarter of 2025 was relatively strong. Mergers and acquisitions involving Canadian companies rose to US$69 billion, doubling the result of the first quarter of 2024. But most of the activity was in the offing before the trade war erupted. As The Globe and Mail reported, “major investors are flush with capital that needs to be put to work and under pressure to return cash to clients. As inflation has eased and interest rates have fallen, the conditions for investing have improved – at least, before trade tensions threw a wrench in the machinery.” Indeed, most of the 787 transactions completed in the first quarter had been announced prior to the tariff battle and attendant stock market fluctuations.
The picture is clearly changing. Stikeman Eliot, a firm known for its large transactional practice, sounded a pessimistic note in a recent review of the trade fight.
“While it is to be hoped that all issues underlying the imposition of tariffs by both countries will soon be resolved, it is inevitable that the current trade war increases the time and expense of many types of business transactions involving U.S. and Canadian buyers and sellers,” the firm wrote. “If a cycle of tariffs and countermeasures (or reciprocal threats) begins, the resulting uncertainty may, in and of itself, deter businesses from pursuing transactions or at least delay transactions while trade implications are considered.”
Searching for Alternatives
A slowdown in deals would be a blow to firms that had hoped 2025 revenue would be driven by an uptick in corporate work. Transactions usually mean substantial hourly billings, and a strong deal flow keeps both associates and partners alike busy and profitable.
Some dealmakers are getting creative. To keep transactions from falling apart amid undulating markets, bankers, investors and counsel are inserting clauses into deals to protect their investments should the markets sink, and Reuters recently reported that investors are also sweetening deal terms to get them across the finish line. Corporate lawyers are also pursuing work on mergers and acquisitions involving distressed companies, although some investors are questioning whether conditions are ripe for such deals.
Initial public offerings are stagnating, as well, pushing some firms to pitch the return of Special Purpose Acquisition Companies (SPACs). SPACs are an IPO alternative that enjoyed a surge of popularity during the height of the COVID-19 pandemic and went into a sharp decline amid regulatory scrutiny, rising interest rates and the poor performance of certain SPAC-owned companies.
"The speed and efficiency of SPACs in volatile markets is invaluable compared to traditional IPOs. As global trade policies continue to evolve, companies should weigh SPACs not just as a temporary alternative, but as a powerful long term strategy for navigating uncertain economic landscapes making it a Wall Street dealmaking staple,” Norton Rose partner Rajiv Khanna recently wrote.
Banning U.S. Companies
Firms are also seeing trade- and tariff-related work developing at the provincial and territorial level. The cities of Toronto, Brampton, and Greater Sudbury, the Yukon Territory, and the provinces of British Columbia, Saskatchewan and Manitoba have all banned their governments from buying items from U.S. companies. On April 4, the Province of Ontario, the nation’s largest, joined the fray.
The Ontario ban extends to the Canadian offices and subsidiaries of U.S. companies if their headquarters or main offices are located in the United States or if they employ fewer than 250 full-time employees in Canada.
The bans are driving inquiries from both Canadian and U.S. clients. As Gowling WLG has noted, defining what constitutes a U.S. vs. Canadian supplier is not entirely straightforward, nor is determining when the measures must be implemented or which goods and services are to be included.
“A procurement ban against a trade partner is unprecedented in Canada; therefore, the risk for bid challenges in certain cases could be high and the outcomes are uncertain for both bidders and procuring entities,” the firm said.
More Uncertainty Ahead
Adding even more complexity to the trade landscape is Canada’s political situation. At this writing, elections are still a few weeks away with Prime Minister Mark Carney and the Liberal Party facing Conservative Party leader Pierre Poilievre. Trump, who has been relatively quiet about Canada recently, may be holding his fire in a bid to help the Conservatives, whose lead in the polls evaporated amid the trade war and after the resignation of Justin Trudeau as prime minister.
Whatever the election result, the long-term effects of the tariff conflict on transactional practices, litigation activity, and the broader economy remain uncertain. If clients continue to face shifting markets, new restrictions and a volatile trade environment, firms are likely to feel the pain as well, and will need to pivot to locate new opportunities in an unpredictable business environment.
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David L. Brown is a legal affairs writer and consultant who has served as head of editorial at ALM Media, editor-in-chief of The National Law Journal and Legal Times, and executive editor of The American Lawyer. He consults on thought leadership strategy and creates in-depth content for legal industry clients and works closely with Best Law Firms, as a senior content consultant.
