SMEs warn they can't wait for answers as tariff concerns force layoffs, higher costs, and supply chain shifts
Uncertainty over US-Canada tariffs is disrupting small- and medium-sized businesses (SMEs) across Canada, with nearly one in five reporting cancelled or paused orders, according to new data from the Canadian Federation of Independent Business (CFIB).
Among exporters, the impact is even greater, with 34 percent seeing orders put on hold as businesses scramble to adjust operations amid trade uncertainty.
CFIB's chief economist and vice-president of research, Simon Gaudreault, emphasized that even the lack of clarity on tariffs is affecting business stability.
“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,” he said.
While some companies may see temporary relief, concerns remain about the long-term impact on SMEs.
A majority of small businesses—54 percent—say they do not feel prepared for the effects of tariffs. Many are already making adjustments, with 24 percent delaying expansion plans and 20 percent reducing workforce hours.
To manage the situation, 45 percent of small firms are actively searching for new suppliers, and 62 percent say they will pass on increased costs to customers at varying levels if tariffs are imposed.
The impact is expected to vary by industry. Retailers indicate they will likely prices to offset tariff costs, while businesses in the agri-business sector anticipate absorbing most of the additional expenses.
Gaudreault said that while some firms may be able to shift business models or explore new markets, many exporters warn that pivoting will be difficult.
“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,” he said.
With businesses facing growing financial pressure, 81 percent of SMEs surveyed want Parliament recalled to address the tariff threat.
CFIB is calling on the government to take immediate action. This includes halting the April 1 carbon tax increase and ensuring carbon tax rebates for small businesses remain tax-free.
It is also urging the passage of legislation to raise the lifetime capital gains exemption threshold to $1.25m while maintaining the Canadian Entrepreneurs’ Incentive.
Gaudreault stressed the urgency for policymakers to step in, warning that about one in five businesses say they can survive less than three months without support if tariffs are implemented.
“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,” he said.
If Canada imposes retaliatory tariffs, he added, any support programs must prioritize small businesses and ensure that tariff revenue is quickly distributed to importers and exporters to mitigate financial strain.
