Item - 2025.EX21.2

The City Manager and the General Manager, Economic Development and Culture recommend that:  

1. City Council adopt the City of Toronto United States Tariff Response Action Plan, as outlined in Attachment 1 and direct the City Manager to update and adapt the Plan as necessary to ensure that the Plan remains current and responsive to the City's needs and priorities.

2. City Council direct the City Manager, in consultation with the General Manager, Economic Development and Culture, the Chief Procurement Officer and other impacted City Divisions, to report to the July Executive Committee with an implementation update on the City of Toronto United States Tariff Response Action Plan and propose any new long-term actions to address the United States-Canada trade related economic uncertainties, if applicable.

3. City Council amend the City’s Procurement By-law, Chapter 195, Procurement, retroactive to March 7, 2025 related to preferring Canadian Suppliers for City procurement below the applicable trade treaty thresholds, and effective upon adoption of this report limiting the eligibility of USA Based Suppliers bidding on competitive City procurements as detailed in this report, and authorize the Chief Procurement Officer to implement the amendments and take necessary actions as set out in Attachments 2 and 4 to this report.

4. City Council approve the Industrial Property Tax Deferral program for the industrial property class for 2025 as set out in Attachment 3 of this report, creating an application based process for industrial property owners to request additional time to pay their property taxes without incurring late payment penalties or interest charges for the six month period between June 1, 2025 to November 30, 2025, and delegate authority to the Executive Director, Finance Shared Services and the General Manager, Economic Development and Culture and their designates to administer the program based on the eligibility criteria, as set out in Attachment 3.

5. City Council amend the City of Toronto Municipal Code Chapter 767, Taxation, Property Tax, to implement the Industrial Property Tax Payment Deferral Program set out in Recommendation 4.

6. City Council forward the City of Toronto United States Tariff Response Action Plan, as outlined in Attachment 1 to the following agencies for their consideration: Toronto Region Board of Trade; Toronto Global; and Destination Toronto.

7. City Council forward the City of Toronto United States Tariff Response Action Plan, as outlined in Attachment 1 to the following provincial ministries for their consideration: Ministry of Economic Development, Job Creation and Trade; Ministry of Intergovernmental Affairs; and Ministry of Municipal Affairs and Housing.

8.  City Council forward the City of Toronto United States Tariff Response Action Plan, as outlined in Attachment 1 to the following federal departments and agencies for their consideration: Department of Finance, Federal Economic Development Agency for Southern Ontario; Innovation, Science and Industry; Destination Canada; Invest in Canada; and Global Affairs Canada.

Canada and the United States (US) have one of the world's most integrated and successful economic relationships. Trade between the two countries has driven decades of sustained economic growth, creating jobs and generating wealth. A more protectionist posture by the new US administration and a series of economic policy announcements, including tariffs and rising to the threat of the annexation of Canada, have shattered the confidence of Canadians in this economic union, upon which the Canadian economy has long relied. While the application of tariffs presents the immediate threat, the deep uncertainty and the risk of a new US political consensus in favour of economic nationalism, pose long-term threats to Toronto’s economy.

As Canada and Ontario's economic engine, Toronto has a critical interest in protecting its businesses, workers and residents while building greater long-term economic resilience. This report presents the City of Toronto United States Tariff Response Action Plan, outlining the City of Toronto's immediate response to the potential impacts from the US' volatile economic policies. The Plan details ten (10) immediate actions to be implemented over the next 30 days to ensure Toronto remains resilient amidst economic adversity while continuing to build a strong and diversified economy to enable growth with a commitment to return to Council with additional measures in future.

Staffing resources and expertise needed to support the planning and implementation of the immediate actions of the City of Toronto US Tariff Response Action Plan will be accommodated within existing budgets, including by reallocation within divisional budgets for Economic Development and Culture, Purchasing and Material Management and other impacted divisions, where required.

Industrial Property Tax Deferral Program

There are 2,047 industrial properties eligible for the proposed Tax Deferral Program with an average Current Value Assessment (CVA) of $2.4 million. The property tax deferral program is expected to provide cash flow relief of approximately $28,600 to an average industrial property during the deferral period of June 1, 2025 to November 30, 2025.

In addition, property owners will benefit from waived payment penalties. The exact benefit to each owner will depend on the length of time over which penalty and interest amounts are waived.

Table 1 is an example of an average industrial property, showing the benefit of an interest and penalty free cash flow deferral for the full 6-month period.

Table 1: Estimated Average Cash Flow Deferral to Property Owner

The total cost of the proposed program to the City is expected to be minimal, with anticipated foregone interest earnings of approximately $60,000 to $150,000 in 2025, based on the City’s projected short-term investment rates and a 10 percent to 25 percent program uptake. This reflects the expected collection of property tax revenue in December, in comparison to regularly scheduled installments.

Table 2 below provides estimates on total cash flow deferrals, based on take-up rates between 10 percent to 25 percent for industrial properties.

Table 2: Potential Applicants and Total Cash Flow Deferrals for Payment Deferral Program

There may be future financial implications to implement actions of the City of Toronto United States Tariff Response Action Plan. Due to the uncertain and evolving nature of the United States-Canada trade relationship, the associated future financial impacts cannot be fully determined until such time there is greater clarity on the duration, scope and impact of the tariffs, and until some of these proposed actions and expected impacts are further assessed. This will require more longer-term review, planning and assessment among relevant City Divisions. If determined necessary, any incremental resource requirements including staffing impacts and implications on capital funding to advance the actions will be submitted for consideration as part of future budget processes, subject to the City's financial and resource capacity against other critical City-wide capital priorities and operating impacts.

The Chief Financial Officer and Treasurer has reviewed this report and agrees with the information presented in the Financial Impact section.

The City Manager and the General Manager, Economic Development and Culture recommend that:

1. Executive Committee receive this report for information.

The City Manager and the General Manager, Economic Development and Culture will be submitting a report that provides information on the City of Toronto United States Tariff Response Action Plan, which will detail the City's response to United States' economic policies, to the Executive Committee before its meeting on March 19, 2025.  

Further information on financial impacts will be outlined in the forthcoming supplementary report.

The Chief Financial Officer and Treasurer has reviewed this report and agrees with the information as presented in the Financial Impact section.