With just a week remaining before U.S. President Donald Trump’s new wave of tariffs targets Canadian exports, a recent survey has raised alarm among small businesses across Canada. Should the proposed 50 per cent levies come into force, the repercussions for the Canadian economy could be severe. While Canada has navigated various tariffs on commodities such as steel, aluminium, and automobiles for over a year, the majority of goods traded under the Canada-U.S.-Mexico Trade Agreement (CUSMA) have thus far escaped these punitive measures. However, that could change on August 19.
Small Exporters Face Uncertainty
According to a survey conducted by the Canadian Federation of Independent Business (CFIB), nearly 40 per cent of Canadian exporters currently have products that would be subject to the impending tariffs. Alarmingly, over three-quarters (77 per cent) of these exporters anticipate a loss in revenue should the tariffs go ahead. Furthermore, more than one-third (35 per cent) fear they could lose at least half of their income.
Dan Kelly, president of the CFIB, expressed the gravity of the situation: “Most of these businesses have been operating under the long-standing assumption that CUSMA-compliant goods would remain tariff-free.” He added that the looming threat of reduced sales, price cuts, or a complete shift to alternative markets is creating significant anxiety among small exporters as the deadline approaches.
Businesses Taking Precautionary Measures
In light of the potential tariffs, Canadian businesses are already taking steps to mitigate the impact. A separate survey from Merchant Growth revealed that over 60 per cent of small businesses have some level of dependence on the U.S. market. Alarmingly, 13 per cent classified this relationship as “core” to their operations. The survey also indicated that more than half (55 per cent) have reduced their spending, while a quarter (25 per cent) have postponed hiring. Additionally, another 25 per cent reported that they have raised prices for consumers to cushion against anticipated losses.
Ongoing Negotiations in Washington
Canadian officials are actively working to secure a deal with their U.S. counterparts before the tariffs take effect. Trade Minister Dominic LeBlanc is currently in Washington, accompanied by Chief Trade Negotiator Janice Charette. The pair met with U.S. Trade Representative Jamieson Greer earlier this week. LeBlanc stated that negotiations are ongoing and that they are committed to advancing and defending Canadian interests at the negotiation table.
Why it Matters
The looming tariffs pose a significant threat not only to small businesses but also to the broader Canadian economy. With a substantial portion of exports at risk, the uncertainty surrounding trade relations could lead to job losses, reduced consumer spending, and a slower economic recovery. As Canada continues to navigate its relationship with the U.S., the outcome of these negotiations will be pivotal in determining the future stability of its export sector.
