How Tariffs Are Reshaping the Landscape for Canadian SMBs
The uncertainty of tariffs have fundamentally altered the global economy and effected businesses in every sector, especially for Canadian SMBs. Intero has solutions and expert advise on how to not just survive, ut thrive in this challenging environment.
In today's increasingly complex global trade environment, Canadian small and medium-sized businesses (SMBs) face a growing challenge: the rising impact of tariffs. According to the Canadian Federation of Independent Business (CFIB), nearly 7 in 10 Canadian SMBs report that tariffs have directly affected their operations in the past two years, with many more likely to be impacted as the tariff environment evolves.
The Current Tariff Landscape for Canadian Businesses
Tariffs on goods crossing the Canada-US border have been particularly volatile under the current United States Administration. Despite the CUSMA agreement (formerly NAFTA), targeted tariffs have emerged in several key sectors:
Steel and aluminum: 25% and 10% tariffs on steel and aluminum
Softwood lumber: Duties averaging 17.9% on Canadian exports to the United States
Retaliatory measures: Canada's counter-tariffs on $16.6 billion of American imports
Automobile Manufacturing: 25% tariffs from the United States on automobile manufacturing
The Trade Commissioner Service of Canada reports that these measures have created a $1.8 billion annual burden on Canadian businesses, with SMBs bearing a disproportionate share of this impact.
How Tariffs Are Affecting Your Bottom Line
A comprehensive Business Development Bank of Canada (BDC) study revealed that nearly 60% of Canadian SMBs have restructured their supplier networks in response to tariff pressures (BDC, "Trade Barriers and Canadian SMBs," 2023).
"When you're dealing with aluminum extrusions that go into window products, and all of a sudden you have a 10 percent increase in the cost of those extrusions, it's a challenge,"
This quote from Charles Loewen, CEO of Manitoba-based Loewen Windows, highlights the real-world impact faced by Canadian manufacturers (CBC, "Manitoba window maker adjusts to aluminum and steel tariffs," 2021).
The Financial Impact: What Canadian Business Owners Need to Know
Statistics Canada's "Survey of Manufacturing" (2023) provides concrete evidence of tariff consequences:
2-5% profit margin reductions in manufacturing sectors directly impacted by tariffs
41% of SMB exporters are reporting US market access challenges due to tariff-related price increases (EDC, "Global Export Forecast," 2023)
Documented 4.2% bottom-line impact for companies like Conestoga Wood Specialties (Canadian Woodworking Industry Journal, 2022)
Again, this is not even to mention the impact which will occur with the new 2025 tariffs which will have a wide reaching impact both on the Canadian economy and the global economy.
5 Proven Strategies Canadian Small Businesses Are Using to Overcome Tariff Challenges
1. Market Diversification: Looking Beyond Traditional Borders
The Forest Products Association of Canada reported Canadian lumber exports to China increased by 25% following US tariff implementation (FPAC Annual Report, 2022).
Susan Yurkovich, President and CEO of the BC Lumber Trade Council, confirmed this strategic pivot: "We've significantly increased our focus on Asian markets in response to US tariff uncertainties. This diversification strategy has helped offset impacts from the ongoing softwood lumber dispute" (BC Lumber Trade Council Press Release, 2022).
Recent quotes from all party leaders in the upcoming Canadian election echo this attitude in the wake of broad tariffs on every industry. Prime Minister Mark Carney said: "Over the coming weeks, months, and years, we must fundamentally reimagine our economy." Carney said. "We must ensure that Canada can succeed in a drastically different world… The old relationship we had with the United States based on deepening integration of our economies and tight security and military cooperation is over." (CBC News, 2025)
2. Supply Chain Restructuring: Building Resilience Through Flexibility
The Canadian Manufacturers & Exporters association documented that 62% of their members have restructured supply chains specifically to address tariff pressures (CME, "Trade Barriers Survey," 2022).
Even larger companies like Ontario-based Magna International have implemented strategic changes that smaller suppliers in their network have adopted: "We've implemented a more regionalized supply chain approach to minimize cross-border tariff exposure," explained Magna's Chief Procurement Officer (Magna International, Annual Report, 2023).
3. Technology Investment: Offsetting Tariff Costs Through Efficiency
Innovation, Science and Economic Development Canada (ISED) research demonstrates that digitally advanced small businesses are 2.6 times more likely to maintain profitability despite tariff impacts (ISED, "Digital Adoption in Canadian Manufacturing," 2023).
These investments typically focus on:
Inventory management automation
Production efficiency technologies
Supply chain visibility systems
Digital procurement platforms
4. Strategic Tariff Classification: An Often Overlooked Opportunity
The Canada Border Services Agency (CBSA) highlights that proper product classification under Harmonized System (HS) codes can significantly reduce unnecessary tariff payments (CBSA, "Tariff Classification Guidelines," 2022). This can be especially beneficial for Canadian businesses who are looking to trade outside of the United States.
5. Leveraging Government Resources: Financial Support Programs for Canadian SMBs
Several targeted government programs can help offset tariff impacts:
CanExport Program: Up to $75,000 in funding for market diversification (Global Affairs Canada, 2023)
Trade Commissioner Service: Market intelligence in 160+ global cities (TCS Annual Report, 2022)
EDC Export Guarantee Program: Enhanced financing access for export activities (Export Development Canada, 2023)
Strategic Innovation Fund: Support for competitiveness-enhancing projects (Innovation, Science and Economic Development Canada, 2023)
Your Tariff Action Plan: Next Steps for Canadian Business Owners
Step 1: Conduct a Tariff Vulnerability Assessment
Begin with a comprehensive analysis of your:
Current supply chain exposure to tariff-vulnerable regions
Customer base concentration in tariff-affected markets
Pricing structure resilience against potential cost increases
Step 2: Explore Market Diversification Opportunities
Canada's 15 free trade agreements covering 51 countries offer substantial alternatives to tariff-heavy markets.
Step 3: Review Product Classification Systems
Work with trade specialists to ensure your products are correctly classified under the Harmonized System to avoid unnecessary tariff payments.
Step 4: Investigate Foreign Trade Zone Benefits
According to FTZ Canada, the country's 14 Foreign Trade Zones offer significant tariff deferrals and exemptions (FTZ Canada, 2023).
Step 5: Build Industry Connections
Organizations like CFIB and Canadian Manufacturers & Exporters provide specialized resources for navigating tariff challenges.
Conclusion: Turning Tariff Challenges into Competitive Advantage
While tariffs present significant obstacles for Canadian small businesses, strategic approaches can transform these challenges into opportunities. By diversifying markets, restructuring supply chains, embracing technology, and leveraging government resources, your business can build lasting resilience against current and future tariff impacts.
As global trade volatility continues, businesses that implement these strategies position themselves not just to survive but to thrive in an increasingly complex international marketplace.
About Intero
Intero specializes in helping Canadian SMBs optimize their operations and expand into new markets. Our team of trade specialists provides customized solutions for businesses navigating complex tariff environments.
Contact us today for a free consultation on how your business can minimize tariff impacts and maximize global opportunities.
References
Business Development Bank of Canada. (2023). "Trade Barriers and Canadian SMBs." BDC Research Report.
Canada Border Services Agency. (2022). "Tariff Classification Guidelines." CBSA Publications.
Canadian Broadcasting Corporation. (2021). "Manitoba window maker adjusts to aluminum and steel tariffs." CBC News.
Canadian Broadcasting Corporation (2025). “RECAP | Canada election: Carney says Trump ‘respected sovereignty of our country’ during private call” CBC News.
Canadian Manufacturers & Exporters. (2022). "Trade Barriers Survey." CME Industry Report.
Canadian Woodworking Industry Journal. (2022). "Tariff Impact Analysis." Industry Publication.
Department of Finance Canada. (2022). "Countermeasure Response to US Tariffs." Government of Canada.
Export Development Canada. (2023). "Global Export Forecast." EDC Publications.
Forest Products Association of Canada. (2022). FPAC Annual Report.
FTZ Canada. (2023). "Foreign Trade Zone Benefits for Canadian Businesses." FTZ Canada.
Global Affairs Canada. (2023). "Softwood Lumber Trade Dispute." Government of Canada.
Innovation, Science and Economic Development Canada. (2023). "Digital Adoption in Canadian Manufacturing." ISED Research Report.
Magna International. (2023). Annual Report.
Statistics Canada. (2023). "Survey of Manufacturing." Government of Canada.
Trade Commissioner Service. (2022). TCS Annual Report.
