Relocating to the USA may not be a good optionnfor Canadian companies

Some Canadian companies are considering moving ("fleeing") to the USA to avoid the worst effects of Donald Trump's punitive tariff increases. Indeed, some have already done so. 

My first reaction is: this is exactly what Trump wants, so why would you have him the satisfaction? But, of course, the companies say, they are beholden to their shareholders, and they must do whatever is necessary to maximize profits and the dividends of their shareholders. 

Well, no, not everything. There are other considerations than profit at play here. Capitalism is not strong on ethics, but it behooves us all to to think about whether products are manufactured using forced labour, equitable and safe employment practices, reducing the environmental footprint, etc, etc. Modern and progressive shareholders demand that kind of thing too, right? Arguably, pandering to the whims and foibles of a crazy guy like Donald Trump is just such a moral imperative.

As we have seen recently, though, when push comes to shove, profits usually seem to "trump" ethics, and we have seen many major companies pulling back from their DEI commitments, their climate commitments, etc (and some never went there in the first place).

The other thing, though, is that it can be complicated and often costly to relocate from Canada to the USA, and it may not even be in the shareholders' best interesNasdaq.

One big impetus for relocation is the potential to get listed on US stock exchanges like the S&P 500 and Nasdaq. But there are already many American companies queuing up to get onto those listings, and it is by no means certain that a newly-located Canadian company will succeed. Plus, there are moves afoot that may soon allow Canadian and other foreign companies to be listed on the S&P index anyway.

There are substantial logistical, legal and other costs involved in redomiciling and establishing a company in a new jurisdiction. It may not even avoid tariff costs, even in the short term: remember, US tariffs hurt American companies even more than the foreign country they are aimed at (which is why everyone else is so confused at Trump's insistence on using such a heavy-handed and inefficient policy to further his aims), and the effects of potential relatiatory Canadian tariffs must also be taken into account. We don't actually know how long these tariffs will be in effect - the landcape changes daily - and relocating is a long and involved process. In addition, there may be significant (political and economic) backlash from the old country at such a move (as at least one Quebec company found to their cost).

Finally, companies should know that there is a 25% departure tax on the relocating company's assets, which for most businesses could prove the ultimate deal-breaker.

So, definitely not a slam dunk. And, in most cases, not a viable option at all.