A New Trade Storm Brews
Canadian businesses are scrambling as 50 per cent US tariffs on billions of dollars’ worth of goods took effect Saturday, following the collapse of months-long trade negotiations. Prime Minister Mark Carney declared Canada had “walked away from a bad deal,” promising retaliatory tariffs on American products. Yet for entrepreneurs like Ela Onisto, owner of Wick’ed Fragrance House in Innisfill, Ontario, the fallout is already tangible. Her small-batch candle and fragrance business, reliant on a Canadian supply chain, faces higher costs and dwindling customer spending. “It’s a domino effect,” Onisto said, explaining how her suppliers’ ties to the US market ripple through her operations. Small businesses, already stretched thin, now grapple with razor-thin margins and unpredictable demand.
Small Businesses Bear the Brunt of Tariff Shock
Onisto’s ordeal mirrors a broader crisis affecting Canadian entrepreneurs. The Canadian Federation of Independent Business estimates 40 per cent of small exporters sell products now subject to the tariffs, with a third predicting sales drops of 50 per cent or more. Matthew Holmes of the Canadian Chamber of Commerce warns that such uncertainty has paralyzed investment and hiring. “In 2025, there were over 52 different changes to the American tariff and tax code—that’s more than one a week,” he said. Businesses are hesitant to commit to new projects or expand, fearing sudden policy shifts.
For Onisto, the challenge is twofold. While she prioritizes Canadian suppliers, many of them depend on US markets, forcing her to absorb costs that she cannot pass on to customers. “You don’t want to scare the customer,” she said, noting how her profit margins are squeezed. The tariffs have also altered consumer behaviour, with some shoppers opting for cheaper alternatives. “Support the small guys—we really depend on customers to support us,” Onisto urged, appealing to local shoppers amid the turmoil.
Ripple Effects Across Canadian Industries
The tariff shockwaves extend beyond retail and manufacturing. Geoff Stewart, founder of Alberta’s Rig Hand Craft Distillery, has already pivoted his business model. Fearing US tariffs on packaging materials, his company closed a Texas facility, losing contracts in Texas, Arizona, and Alaska. Now focusing on Canada and Japan, Stewart admits the shift is far from seamless. “Moving away from the US isn’t an easy solution,” he said. Distilleries and other export-dependent industries face a tightrope walk: diversifying markets while navigating retaliatory tariffs from the US.
The agricultural sector also feels the pinch. Canadian grain exporters, for instance, rely heavily on US demand. With tariffs threatening prices, farmers are left in limbo, unsure whether to increase production or scale back. Meanwhile, the automotive industry, a cornerstone of Ontario’s economy, faces potential price hikes on US-made components. Premier Doug Ford has backed Carney’s decision to abandon the deal, warning it would harm sectors like auto and steel. Yet even with federal backing, many businesses lack the resilience to absorb sustained shocks.
Government Promises Support Amid Growing Concern
Ottawa has pledged further measures to cushion the blow, with Carney vowing details soon. Ontario’s support for small businesses includes grants and tax incentives, though critics argue more is needed. Holmes of the Chamber of Commerce calls the response “appropriate” but stresses the need for predictability. “Governments are treating this like a crisis, and that is the appropriate response right now,” he said.
Yet skepticism lingers. The frequent changes to US trade policy have left businesses guessing. Stewart, for one, demands clarity: “We can’t run our businesses with that amount of uncertainty.” The lack of a stable trade framework risks long-term damage to Canada’s economic ties with its largest neighbour.
Why it Matters
The US-Canada trade standoff underscores a fragile economic relationship, where tariffs can upend small businesses while testing the resilience of entire industries. For entrepreneurs like Onisto and Stewart, the immediate threat is survival—rising costs, falling sales, and an unpredictable market. But the broader implication is a warning about the vulnerability of supply chains and the need for stable trade policies. As tariffs reshape trade dynamics, Canada’s ability to navigate this crisis will not only affect its economy but also set precedents for global trade relations. In an era of rising protectionism, the stakes have never been higher.
