MLT Aikins LLP Trade Tides Navigating Legal Strategies in Turbulent Times

The agricultural industry is facing unprecedented challenges, from shifting trade regulations and looming tariffs to evolving legal landscapes and supply chain disruptions. How can a business prepare for the future when the emerging trade “war” between the U.S. and Canada is changing at such a rapid pace? 

Scott Masson, Partner at MLT Aikins LLP, says it’s critical to understand the contracts you have in place and ensure that any future contracts incorporate tariff-related protection to help mitigate risk. 

“There is an immense level of uncertainty that suppliers and manufacturers are faced with that’s likely to be with us for quite some time,” says Masson, who traded Vancouver for law school in Saskatoon and has called Saskatchewan home ever since. “You need to be absolutely crystal clear in terms of what your contracts say.”

Understanding the fine print

A contract governs how AMC members are buying and selling products and determines which, if any, impact tariffs will have on their business. MLT Aikins LLP, a proudly western Canadian law firm with offices from Vancouver to Winnipeg, helps clients understand the risk profile that exists with the contracts they have and what can be done or changed. 

When you’re looking at clauses that impact the allocation of tariff risk in your contract, Masson says the first place to start is the incoterms, a set of rules that define the responsibilities of buyers and sellers in international trade. While many contracts expressly state that the buyer is responsible for any increased costs associated with tariffs, that’s not always the case. 

“There’s a lot of debate about whether or not the change of tariff is actually a change of law,” Masson explains. “The recommendation is to be absolutely clear about who is responsible for that increase in tariff risk.”

Force majeure is another contract clause getting a lot of press lately. While case law generally doesn’t suggest that increased costs by themselves can trigger a force majeure, Masson says it all depends on the individual language in the contract. 

There’s a lot of debate about whether or not  the change of tariff is actually a change of law, The recommendation is to be absolutely clear about who is responsible for that increase in tariff risk.

“Everything needs to be looked at more carefully now in light of trade uncertainty and tariff implications,” he says, which includes reviewing contract templates that may have been developed long ago. “We encourage people to look at those documents and make sure they still make sense in this environment.” 

As for future contracts, Masson says it’s important to understand which party you want to manage the risk and what the potential risk is associated with tariffs. Then you need to develop a strategy in terms of how that risk is going to be mitigated. 

A team approach

To navigate all these challenges, Masson suggests a collaborative approach where vendors and suppliers work together to understand what the tariff risk is and how the parties can work together to reduce the impacts.

It takes a whole team approach, and it’s important to make sure that there is an integrated strategy from both a business and a financial perspective.

“What we’re seeing now is how strong relationships are within the supply community,” says Masson. “This is something that is hitting everyone.” 

MLT Aikins LLP helps clients buying and manufacturing or selling major equipment and advises them on all aspects of purchase and sales agreements. Part of that is working with the client’s management team, including financial advisors and customs brokers, to fully understand their business and the potential risks they face. 

“It takes a whole team approach,” Masson says. “And it’s important to make sure that there is an integrated strategy from both a business and a financial perspective.” 

The key to navigating the high level of uncertainty in the market is being able to adapt. As the old adage says, he stresses that the only constant seems to be change.

The value of membership

For MLT Aikins LLP, the value of being a member of the Agricultural Manufacturers of Canada (AMC) is the exposure to other service providers and insights into trends and broader industry concerns. 

“One of the huge benefits of being a member is being able to talk to a wide cross section of industry,”  says Masson. “By seeing the bigger picture, we can help our clients  better and hopefully we all get smarter as a result.”