New Procurement Restriction Policy Issued by the Ontario Government Targeting American Companies As a Result of Tariff War

As you know, we are in unprecedented times from a geo-political standpoint. The different levels of Canadian governments are evolving their policies in a reactive way. Recently, the Ontario government has issued its own policy with respect to the procurement of US companies. 

On April 4, 2025, the government of Ontario published its new Procurement Restriction Policy (the “Policy”), following Premier Doug Ford’s March 4, 2025 statement that Ontario will not do business with US companies as long as US tariffs remain in place. The Policy restricts US businesses from participating in Ontario’s public sector procurements. It is retroactive to March 4, 2025, the date of Premier Ford's announcement. 

The Province has also released a Frequently Asked Questions document (the “FAQ”) and a Guide for Public Sector Buyers. As we know, the geo-political landscape seems to fluctuate on an almost daily basis. It is possible, and quite probable, that the Canadian government’s responses may also adjust accordingly.  

All Ontario Public Sector Purchasers Are Subject to the Policy 

The Policy applies to all provincial ministries, entities covered by the Ontario Public Service (OPS) Procurement Directive, Ontario Power Generation (OPG), and the Independent Electricity System Operator (IESO). This includes all Ontario crown agencies and Crown Corporations. 

The policy also covers all Broader Public Sector organizations (“BPS”) subject to the BPS Procurement Directive, such as provincial health organizations, school boards, and post-secondary institutions. 

Many municipalities have adopted their own rules to exclude US businesses from their procurements. In addition, municipalities procuring goods or services that are subject to funding agreements with the Province may be required to comply with the Policy as a condition of funding. 

What is a US Business? 

The Policy creates a two-part test to determine if an entity is a US business. An entity will be a US business if: 

1. it has its headquarters or main office located in the US; and 

2. it has fewer than 250 full-time employees in Canada at the time of the applicable procurement process. 

   
   

Bidders cannot avoid this test or bypass the Policy by setting up a Canadian shell entity to submit bids. The Policy stipulates that if a bidder or vendor is a subsidiary of another corporation, the first part of the test is met if that bidder or vendor is controlled by a corporation that has its headquarters or main office located in the U.S. 

Only New Procurements Impacted by Policy 

The Policy applies to “all new procurements of goods and services (consulting and non-consulting) at any value” undertaken by any method of procurement including open, invitational, and sole source contracts. It also applies to contract extensions beyond those set out in an agreement, which are considered new non-competitive procurements. However, the Policy does not apply to the ongoing use of existing Vendors of Record or other available arrangements. 

Exemption – Special Circumstances 

The Policy includes an exemption for situations where the US business is the only viable source for the good or service, and where the procurement cannot be delayed. 

If you have questions about the Policy or need support navigating these new parameters, reach out to Froese Law.