Strong Canadian Support is Critical for Small Businesses to Survive—And Even Thrive—Amid Trump’s Tariff Chaos

Canada’s small businesses are under siege. Ever since U.S. President Donald Trump announced a 25 percent tariff on Canadian imports, the fallout has been swift: hiring freezes, layoffs, and stalled investments are only the beginning. While Trump has paused tariffs on goods that fall under the USMCA trade agreement until April 2, the uncertainty is escalating every day as the deadline looms. Some Canadian exports, like potash for U.S. farmers and energy for northern U.S. states, can count on reduced tariffs. For most businesses, the only thing they can count on is chaos.

It’s enough to confuse anyone who has to make business decisions today since there’s no telling what Trump’s capriciousness will bring us tomorrow. This uncertainty is especially impacting small businesses. Not only do they make up 98 percent of Canada’s employer businesses, 73 percent of the 48,718 Canadian enterprises that export goods are SMEs. Despite the major role these businesses play in our economic resilience, they have fewer resources to protect themselves and options for adaptation compared to their medium and large counterparts. 

The best way for small businesses to weather this uncertainty is through strong cash management. Maintaining healthy working capital is essential, especially in challenging times. Tariffs will make products that Canadian businesses export to the US more expensive, which  could reduce demand, and therefore negatively impact sales. Without time to right size cost structures, Canadian businesses will be left scrambling to manage lower margins and a mismatched cost and revenue structure. Businesses that pay suppliers quickly can negotiate better prices to capture more margin, but this only works if the business has enough cash on hand to take advantage of this option. Other options to deal with cash flow issues resulting from tariffs include accepting credit card payments (only if customers are willing to pay by credit card), extending payment terms with customers, reducing inventory, using invoice factoring, or a combination of these.

Adding contract clauses to shorten price increase reviews with customers in response to tariffs can offer long-term protection for the future. However, this won’t help businesses today who understandably never expected a trade war and don’t have this in existing contracts. In that case, they can pass on some of the tariff costs to customers–but definitely not 100 percent. 

Even with smart financial strategies, small businesses will feel the squeeze. These businesses and the entrepreneurs behind them employ 5.8 million Canadians and drive half of private sector GDP. They’ve supported us. Now, it’s our turn to support them.

Loblaws has taken a positive step to lead the way. They recognized the pain that slow action will cause their suppliers, so they recently announced that they would expedite approvals for price increase requests from suppliers, cutting the wait from 12 weeks to 6 weeks. Ontario Premier Doug Ford banned U.S. companies from government contracts in the province while tariffs are in effect. While these are steps in the right direction, they’re not enough. We need to come together as one supply chain in Canada. More government agencies and large Canadian businesses should follow these examples to keep small businesses powering our economy while equipping them to make the most of opportunities. 

A once in a generation shock to the economy like this does have silver linings; Canadian entrepreneurs have a history of finding and creating them. Common examples are easy to find: Jim Pattison’s strategic acquisitions led to success despite the 1980’s recession. Kevin O’Leary’s scrappy moves during the 2008 downturn propelled him to new heights in the finance industry. Now, Prime Minister Mark Carney is working with Premiers on a national trade strategy, encouraging economic independence and efficiency. Businesses and consumers alike are boycotting American-made goods in favor of buying from fellow Canadians. Small businesses will no doubt make the most of these changes and create more chances to succeed. 

The trade war is a wake-up call for the entire Canadian business community; a chance to break free from reliance on the U.S. and build a stronger, more self-sufficient economy. Now is the time to support Canadian businesses, empower our entrepreneurs, and turn challenges into opportunities. Our greatest advantage isn’t dictated by foreign policies—it’s our resilience, innovation, and commitment to each other. That is our true “trump card,” and no one can take it from us.

About Steven Uster

Steven Uster is the Co-Founder & CEO of FundThrough, a leading fintech company headquartered in Toronto, Ontario, that pays invoices early to accelerate cash flow and unlock growth for small and medium businesses across North America. He’s been active in the alternative finance space since 2009. Steven has an MBA from The Wharton School and a Bachelor of Commerce with Honours from McGill University, where he was a Loran Scholar.