Navigating uncertainty: Insights from Mercer QuickPulse® Canada Compensation Planning Survey 

1006242 ALEX TREADWAY

Mercer conducted its latest QuickPulse® Canada Compensation Planning Survey, gathering insights from over 400 Canadian companies regarding their annual salary increases, compensation structures, promotions, and other critical compensation planning topics. This survey included a focused discussion on a pressing issue: tariffs.

It’s important to note that this survey was conducted from March 10 to 21st, 2025, just after the first set of tariffs were enacted on Canada on March 4th. The tariff situation continues to evolve. 

Impact on financial performance

The survey revealed a general uncertainty among Canadian employers regarding the anticipated effects of tariffs on their overall Canadian financial performance in 2025. Currently, 7% of Canadian employers expect that tariffs will have a high impact on their operations, with financial performance expected to be significantly under budget. A further 26% of respondents expect a moderate impact, and 18% of organizations expect that financial performance will be on or above budget. 
This chart is unable to display due to Privacy Settings.
The chart could not be loaded because the Privacy Settings are disabled. Under the "Manage Cookies" option in the footer, accept the “Functional cookies” and refresh the page to allow the chart to display.
Not surprisingly, nearly half (48%) of respondents are unsure about how tariffs may impact their performance this year.
When broken down by industry, some of the largest variations in the projected impact of tariffs on financial performance compared to the national results include:

High Tech

Most likely to expect a low impact on financial performance this year (33% vs. 18% nationally), with financial performance expected to be on or above budget

Banking/Financial Services and Mining & Metals

Most likely to expect a moderate impact on financial performance this year (40% vs. 26% nationally)

Manufacturing

Most likely to expect a high impact on financial performance this year (33% vs. 7% nationally), with financial performance expected to be significantly under budget

The graph below shows the estimated impact of tariffs, by industry, on Canadian organizations’ overall financial performance in 2025:

This chart is unable to display due to Privacy Settings.
The chart could not be loaded because the Privacy Settings are disabled. Under the "Manage Cookies" option in the footer, accept the “Functional cookies” and refresh the page to allow the chart to display.
The graph presents a financial performance analysis across various sectors, categorizing the expected impact on budget as low, moderate, or high. It includes statistical data reflecting the percentage of respondents from different industries—such as retail, banking, manufacturing, energy, and life sciences—who anticipate their financial performance will be on or above budget, significantly under budget, or are unsure. The data is organized in a tabular format, highlighting the varying expectations of financial performance across these sectors. Overall, the graph serves as a snapshot of industry sentiment regarding financial outcomes.

Mitigation strategies

To address the challenges posed by tariffs, employers are considering various strategies, including cost reduction and supplier diversification. Additionally, many organizations are exploring opportunities to expand into new markets and adjust pricing structures. 

When the survey asked employers what mitigation strategies they are considering to address the impact of tariffs on their business, reducing costs was the most common response. Forty-two percent of respondents agree or strongly agree that they anticipate a focus on cost management as a result of tariffs. However, an equal proportion of respondents, when combined, disagree with or are unsure about using cost management as a mitigation strategy.

Nationally, only 7% of respondents are concerned about potential layoffs in the short-term (within 6 months), with the layoffs expected to be minimal to moderate on their total headcount. However, 43% remain unsure about the likelihood of layoffs within the short term. By industry, High Tech organizations are the least concerned that tariffs will lead to layoffs, while more than one-third of Manufacturing companies expect layoffs in Canada. Projections for the longer term (within 18 months) show similar uncertainty across the country, with a slight increase in respondents unsure about future layoffs.

In the long term, companies are contemplating several human resources strategies in response to tariffs. Key considerations include organizational design (36%), upskilling and reskilling initiatives (35%), and enhancing employee engagement programs (33%). Notably, only 3% of respondents expressed concern about the pressure to relocate operations to other countries, and the majority do not anticipate significant adjustments to their employee compensation strategies.

Addressing employee concerns

The survey indicated that fewer than 20% of Canadian employers have employees who have raised concerns regarding the impact of tariffs on their jobs, with 21% of employers stating that employees have not expressed such concerns. By industry, the response rate jumps to nearly 50% when Manufacturing and Retail/Wholesale organizations reported that their employees are concerned about tariffs affecting their jobs, whereas employees in Banking/Financial Services and Insurance/Reinsurance are the least likely to have expressed concerns that tariffs will impact their jobs.

For those employers facing employee inquiries, many have responded by holding town hall meetings and disseminating company-wide communications. Communication has emerged as a critical factor in maintaining employee engagement amid uncertainty, particularly for industries that are facing increased headwinds due to tariffs.

This chart is unable to display due to Privacy Settings.
The chart could not be loaded because the Privacy Settings are disabled. Under the "Manage Cookies" option in the footer, accept the “Functional cookies” and refresh the page to allow the chart to display.
Fewer than 20% of Canadian employers have employees who have raised concerns regarding impacts of tariffs on their jobs.

As Canadian employers navigate the complexities introduced by new and changing tariff policies, it is essential for organizations to remain proactive in their compensation planning and employee engagement strategies. By fostering open communication and implementing thoughtful mitigation strategies, companies can better position themselves to manage the uncertainties ahead.

With workforce, compensation and communication experts in six Canadian cities, Mercer Canada is available to provide tailored guidance for your organization's specific circumstances in this evolving landscape.

Related Insights