Disclaimer: The following is for informational purposes only and does not constitute legal advice. If you require legal assistance regarding business incorporation, please consult a qualified lawyer.
The new 25% tariffs on Canadian exports (10% on energy) are more than just political headlines—they directly impact small and medium-sized businesses (SMBs) that trade with the U.S.
Here’s what that means in practice:
1. Higher Costs for Exporters
If your business sells products to U.S. customers, these tariffs make them more expensive for buyers in the U.S., potentially reducing demand.
🔴 Example: A Canadian manufacturer selling auto parts to the U.S. now faces a 25% price increase on every exported part, making it harder to compete with non-Canadian suppliers.
2. Supply Chain Disruptions
If your business relies on U.S. materials or components, Canadian retaliatory tariffs could raise costs on imported goods.
🔴 Example: A Canadian food producer that imports U.S. packaging materials may now pay more due to new Canadian tariffs on American products.
3. Cash Flow Challenges
If tariffs reduce demand or increase costs, SMBs may face cash flow problems, especially if they operate on thin margins.
🔴 Businesses may need to renegotiate supplier contracts, adjust pricing, or seek alternative suppliers to stay profitable.
4. Competitive Pressure from U.S. Alternatives
American buyers might switch to non-Canadian suppliers to avoid extra costs.
🔴 Example: A Canadian lumber company exporting to U.S. builders may lose business to a U.S. competitor that isn’t subject to the tariffs.
5. Uncertainty & Planning Challenges
With no clear end to the tariffs, small businesses face uncertainty in pricing, contracts, and long-term growth plans.
🔴 Many businesses will need to reassess market strategies, explore new trade partners, and monitor policy changes.
What Can Small Businesses Do?
Review Pricing & Profit Margins – Can you absorb some costs, or will you need to raise prices?
Explore Alternative Suppliers – Look at non-U.S. sources to reduce reliance on affected imports.
Adjust Contracts – Work with suppliers/customers to renegotiate terms based on new tariff costs.
Monitor Government Support – Canada may introduce relief programs or trade assistance for affected businesses.
Consider Expanding to Other Markets – Look at opportunities in Europe, Asia, or domestic markets to reduce dependence on the U.S.
Final Thought
For small businesses that depend on U.S. trade, the new tariffs increase costs and uncertainty. The best move right now is to stay informed, review financial impacts, and explore diversification strategies.