A Heavy Burden on Smaller Exporters
New U.S. tariffs of 50% apply to about $20 billion in Canadian goods, equal to roughly 5% of Canada’s exports south. The national economy may absorb the shock, but small and medium-sized businesses face much greater danger. Producers of honey, artwork, wool, cosmetics and flowers depend heavily on American customers and have limited alternatives.
A Canadian Federation of Independent Business survey found that 40% of exporters sold products targeted by the tariffs. Nearly 80% of those companies expected revenue losses, while more than one-third anticipated declines of at least 50%. Unlike earlier tariff rounds, the new measures do not exempt goods that comply with the U.S.-Mexico-Canada Agreement.
Businesses Delay Plans and Raise Prices
Individual companies are already changing their operations. Alberta honey producers rushed shipments across the border before the tariffs began, but now fear falling prices. A Calgary canvas-printing company suspended seasonal hiring because half of its sales traditionally come from the United States. An Ontario wool retailer raised prices and then saw American online orders disappear.
Other firms are searching for temporary solutions. A Toronto-area lip balm producer stockpiled U.S.-made containers and considered using a different tariff classification. An Ontario orchid grower said higher prices could drive away customers, while flowers require years of production planning. The floriculture industry estimates that the duties could cause $151 million in annual losses.
Economic Recovery Faces New Uncertainty
The tariffs arrive after Canadian business investment declined for five consecutive quarters. Although the economy grew at a 3.3% annualized rate during the second quarter, companies remain unsure about hiring and expansion. Economists estimate that unemployment could reach 7% by year-end if both countries maintain tariffs. Another projection places potential job losses at 90,000.
Ottawa has announced more than $20 billion in assistance for affected businesses and workers. Canada also plans retaliatory tariffs on U.S. goods beginning September 8. American officials have suggested they may respond, raising the possibility of a broader trade war. Such escalation would spread costs beyond exporters to consumers and companies on both sides of the border.
References
Coletta, A. (2026, 30 agosto). Canadian small businesses to bear brunt of new U.S. tariffs. The Wall Street Journal. https://www.wsj.com/economy/trade/canadian-small-businesses-to-bear-brunt-of-new-u-s-tariffs-7a434c08