Trump’s latest trade threat weighs on Canadian firms with U.S. contracts

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Shares of Canadian companies that do business with the U.S. government fell following President Donald Trump’s threat to bar Canadian-origin products from being sold to federal contractors.

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“From now on, NO RECIPROCITY – NO ACCESS!” Trump said in a social media post Tuesday afternoon, saying Canadian and provincial governments ban U.S. firms from winning contracts in the country.

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He directed the U.S. General Services Administration to work with the U.S. Trade Representative to “take all necessary steps to REMOVE Canadian-origin products from GSA’s Multiple Award Schedules unless Canada restores full and fair reciprocity for American Farmers and Companies.”

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Share prices for IT consulting company CGI Inc., engineering firms WSP Global Inc., AtkinsRealis Group Inc. and Stantec Inc., and construction firm Aecon Group Inc. had all dropped by more than 2 per cent in Toronto as of Wednesday afternoon.

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It’s not yet clear how “Canadian-origin products” are defined, and whether the directive includes services or parent companies of U.S. subsidiaries.

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CGI has “relatively material exposure” to U.S. government contracts, National Bank of Canada analyst Doug Taylor wrote in a client note. “We estimate U.S. government revenue could represent between 15 per cent to 20 per cent of CGI’s total revenue.”

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But the company primarily sells services, not goods, in the U.S., which means CGI may be “potentially more insulated than the current scope of the language implies,” Taylor said. “Risk would become more meaningful if restrictions instead apply based on Canadian (parent) ownership, e.g., if U.S.-based subsidiaries of Canadian companies are also included.”

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CGI said in an emailed statement that CGI Federal, which serves U.S. federal agencies, is a “U.S.-based, wholly-owned operating subsidiary,” and that it employs over 8,000 people “who live and work across 60 U.S. locations.”

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“CGI Federal is proud to provide U.S.-originated technology services and core business platforms under a wide range of contract vehicles to support the federal government’s mission-critical objectives,” it added.

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Following the first round of U.S. tariffs in 2025, the Canadian government introduced a policy that favours local businesses in federal procurement and prioritizes Canadian materials in major construction and defence projects. The move came alongside a push to make Canada more self-sufficient and sovereign in digital capabilities.

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Provinces have also announced limits to U.S. procurement. For example, the Quebec government said this week that it will reserve certain calls for tenders for Canadian firms, and Ontario has a policy that greatly restricts procurement from U.S. businesses while preferring local firms.

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