New data from the Canadian Federation of Independent Business (CFIB) reveals that small businesses are being hit hardest by U.S. and Canadian tariffs on steel and aluminum (59 per cent), as well as Canada’s own retaliatory tariffs on other U.S. goods (58 per cent). In addition, nearly one third of Canadian SMEs will be negatively affected by the loss of the $800 U.S. de minimis exemption.
“Small businesses don’t have a lot of runway left. They are trying their best to absorb the costs, but if nothing changes, they will be forced to make some tough decisions,” said Corinne Pohlmann, executive vice-president of advocacy at CFIB. “The worst outcome for Canada in the trade war is a bad deal, but the second worst outcome is the neverending uncertainty small business owners have been wrestling with for the past six months. The federal government needs to provide some stability and return tariff revenue to help small businesses. We’ve suggested several options, including temporarily reducing the federal small business tax rate to zero or a tariff rebate designed on earlier models, like the carbon tax rebate.”
CFIB data shows that the trade war is squeezing small businesses on every front. Nearly two thirds (62 per cent) face higher expenses while many are also seeing lower revenues (48 per cent), supply chain disruptions (41 per cent), and paused investments (36 per cent). Nearly one in five (19 per cent) small businesses dealing with extra tariff costs report that they will not be able to last more than six months if the tariff status quo remains and nearly four in 10 (38 per cent) said they would last less than a year.
With Ottawa collecting billions in additional tariff revenue on U.S. imports, a strong majority (82 per cent) said the government should ensure that any tariff revenue that is returned includes support for smaller businesses affected both directly and indirectly by trade disruptions.
“The trade war’s impact on Canada’s small businesses should be top of mind for the government as Canada continues its negotiations with the U.S. Canada can’t fix its productivity crisis without empowering its entrepreneurs. If the government wants to build one Canadian economy, it needs to ensure small businesses are part of the solution and that includes providing them with tariff support during this very challenging time,” Pohlmann said.
