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%), as well as Canada’s own retaliatory tariffs on other U.S. goods (58%).
In addition, nearly one-third of Canadian SMEs will be negatively affected by the loss of the $800 U.S. de minimis exemption, said the national organization on Wednesday.
“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 never-ending 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.”
The CFIB is Canada’s largest association of small and medium-sized businesses with 100,000 members across every industry and region.
CFIB said its data shows that the trade war is squeezing small businesses on every front. Nearly two-thirds (62%) face higher expenses while many are also seeing lower revenues (48%), supply chain disruptions (41%), and paused investments (36%). Nearly one in five (19%) 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%) said they would last less than a year.
With Ottawa collecting billions in additional tariff revenue on U.S. imports, a strong majority (82%) 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, it said.
“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,” added Pohlmann.
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Excellent report. It is long overdue that we started to ask the federal government where are the funds from the collected tariffs going!
Not once by any leader during the federal campaign did they have a plan to support small business. My company imports from the US and am caught up in the 25% retaliatory tariffs imposed by the Canadian government. My customers are both small and large (major retailors). While the major retail companies can absorb or at least cost blend with other products and departments, small business does not have that luxury.