Nearly one in five (18%) small- and medium-sized businesses (SMEs) are experiencing cancelled or paused orders due to the ongoing uncertainty around the U.S.-Canada tariff situation, finds new data by the Canadian Federation of Independent Business. That number rises to 34% among exporters.
“The uncertainty around tariffs is almost as damaging as tariffs themselves. It reverberates among business owners right now and businesses are adjusting operations on the fly as a result,” said Simon Gaudreault, CFIB’s chief economist and vice-president of research. “While we may have a few weeks of reprieve, there is still concern about the long-term impact of tariffs on small businesses.”
A majority (54%) of SMEs say they don’t feel prepared for the impacts of U.S.-Canada tariffs. CFIB data also finds that:
- 24% are looking to delay expansion plans,
- 20% are looking to reduce workforce/hours,
- 45% of small firms are looking for new suppliers to address the tariff situation,
- 62% can pass on costs to customers or clients at varying levels if U.S.-Canada tariffs are imposed.
“Some firms may change their business models and find new markets, but it’ll take some time. Many exporters, though, are telling us it will be a major struggle to pivot, and they’ll have to decide whether to lay off staff, remain in Canada or explore other markets,” Gaudreault added. “In some sectors, like retail, many businesses are indicating they’ll be forced to pass on increased costs to customers. Others, like in the agri-business sector, report they will be forced to eat most of the increased costs. Overall, small business owners are sending a clear message that U.S. tariffs and Canada’s retaliatory measures will add further financial strain on businesses and Canadians alike.”
A strong majority of small firms (81%) said they want Parliament recalled to deal with the tariff threat. CFIB is calling for Parliament to immediately reconvene to help small businesses through this period of instability by:
- stopping the April 1 carbon tax increase,
- passing legislation to make sure carbon tax rebates for small businesses are tax free,
- passing proposed legislation to increase the lifetime capital gains exemption threshold to $1.25M and ensuring the Canadian Entrepreneurs' Incentive stays in place.
“About one in five businesses say they can survive less than three months without support if tariffs hit. This should sound an alarm for policymakers. Now is the time to cut taxes, adopt mutual recognition to address interprovincial trade barriers, and promote buying local,” Gaudreault concluded. “If Canada hits the U.S. with retaliatory tariffs, it must make sure any support programs include the needs of small businesses and that the revenue from those tariffs go back to both importers and exporters as quickly as possible.”
Small business owners can share their thoughts and experiences with CFIB by visiting cfib.ca/tariffs.
