U.S. Tariffs: What They Mean to Your Business

President-elect Trump is threatening to implement a 25% tariff on all Canadian-made goods coming into the U.S., as one of his first acts after his inauguration on January 20^th. Given that the U.S. is Canada’s largest trading partner, tariffs can have widespread effects on both sides of border.

Tariffs are taxes imposed on goods as they cross international borders, typically calculated as a percentage of the imported good's total value. The 25% U.S. imposed tariffs on Canadian products will increase the costs of goods imported into the U.S. from Canada. These tariffs are paid by the importer (typically U.S.-based businesses) to U.S. Customs and Border Protection (USCBP).

In response, Canada has announced plans to implement its own tariffs on U.S. goods to level the playing field. Hundreds of American-made goods could be affected. This means that Canadian importers would be responsible for paying those tariffs to Canada Border Services Agency (CBSA).

For example, if Canada places a 25% tariff on imported orange juice, Canadian businesses importing this product from the U.S. will have to pay 25% of its value to the Canadian government. This added cost will likely lead to higher prices for end-users, such as consumers and other businesses.

Given that the U.S. is Canada’s largest trading partner, tariffs can have widespread effects on Canadian SMEs. A recent CFIB survey revealed that 69% of small businesses said tariffs would lead to higher costs of doing business and 65% would increase prices for consumers. Businesses should also expect to face limited inventory or product availability and a need to find alternative markets or suppliers. Nearly 1 in 6 small businesses (17%) also fear they may need to reduce their staff as a result.¹

¹ CFIB, Your Voice December 2024 Survey, Dec. 5-29, 2024, n=1,898.

• Canadian governments need a unified and proactive response to minimize harm to businesses and the economy.
• Governments must focus on reducing the tax burden, cutting red tape, addressing internal trade barriers and strengthening border measures to help small businesses stay competitive.

We’re actively working with governments to minimize the impact of U.S. tariffs on your business. Our efforts include:

• Collaborating with the federal government to address trade challenges and to ensure that our governments are working as a united front.
• We shared the views of SMEs with the federal and provincial governments through a press release and a letter.
• We also plan to conduct a survey to gather valuable insights from SMEs, which will be crucial in supporting the federal and provincial governments in their discussions and responses to U.S. actions.
• Engaging with U.S. trade representatives to emphasize the importance of free trade between Canada and the U.S.
• Keeping small business concerns front and center in discussions about trade policies.
  • We’re committed to ensuring that the voices of Canada’s small business owners are heard in all trade-related discussions. Please share your experiences, we want to hear from you about how the U.S. tariffs are affecting your business.

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