Ottawa (Rajeev Sharma): Canadian businesses are entering another difficult phase of the country’s escalating trade dispute with the United States, with newly imposed U.S. tariffs adding pressure to companies already struggling to plan for the future.
The latest round of 50 per cent U.S. tariffs on a range of Canadian goods took effect after trade negotiations between Ottawa and Washington failed to produce an agreement. Prime Minister Mark Carney has responded by promising dollar-for-dollar Canadian countermeasures on U.S. products, while his government prepares additional support for affected workers and businesses.
For Canadian companies, however, the immediate concern is not only the size of the tariffs. It is the unpredictability surrounding them.
Canadian Businesses Caught in the Middle
Small and medium-sized companies are particularly exposed because many operate with limited profit margins and depend on predictable supply chains.
Ela Onisto, owner of Wick’ed Fragrance House in Innisfil, Ontario, is among the business owners feeling the pressure. Her company produces small-batch natural candles, fragrances and home décor.
Although Onisto tries to purchase supplies from Canadian suppliers, she says the tariff dispute can still reach her business indirectly. Canadian companies in her supply chain may themselves depend on American customers or materials.
That creates a chain reaction.
For businesses such as hers, raising prices could drive customers away, while absorbing higher costs leaves less money available to sustain the company.
Tariff Uncertainty Becomes a Business Problem
The latest measures are the culmination of months of shifting trade policies between the two neighbours.
Prime Minister Carney had said Canada was seeking greater stability and tariff-free access for the vast majority of Canadian businesses. Ottawa also sought to protect small and medium-sized companies from the threat of additional duties.
The U.S. administration nevertheless moved ahead with a new 50 per cent tariff regime after the negotiations broke down.
The White House has defended the tariffs as a response to what it describes as discriminatory treatment of U.S. commerce by Canada. A July proclamation specifically cited Canada’s treatment of U.S. motor vehicles and authorized additional duties of up to 50 per cent on certain Canadian products.
Companies Reconsider Investment and Hiring
For business leaders, the uncertainty itself can be almost as damaging as the tariffs.
When companies cannot predict whether a product will face a new duty weeks or months from now, decisions about expansion, recruitment, equipment purchases and new product launches become harder to make.
Matthew Holmes, executive vice-president and chief of public policy at the Canadian Chamber of Commerce, has warned that businesses have already spent months navigating frequent changes in U.S. tariff policy.
That environment can encourage companies to postpone major commitments rather than risk investing at the wrong moment.
Distillery Turns Towards New Markets
The impact is also being felt by Canadian companies that previously relied heavily on the U.S. market.
Geoff Stewart, founder and president of Alberta-based Rig Hand Craft Distillery, said tariff uncertainty has already influenced the company’s operations.
The company closed a packaging facility in Texas after concerns over the trade environment affected its business there. It subsequently increased its focus on Canada and began exploring opportunities in other international markets, including Japan.
Diversification may provide an alternative route for exporters, but it is not an overnight solution.
Building relationships with new buyers, understanding foreign regulations and establishing distribution networks can take considerable time and investment.
Canadian Companies Face a Double-Edged Challenge
Businesses that source materials from the United States face another complication: even when they sell primarily within Canada, retaliatory tariffs can increase the cost of imported components and supplies.
That means a company may be affected by the trade dispute without directly exporting its products to the U.S.
This is one reason business groups have emphasized the need for clarity from governments.
A company can adjust to higher costs, executives say, but constantly changing rules make long-term planning much more difficult.
Ottawa Promises More Support
The federal government has indicated that further measures will be introduced to assist workers and businesses affected by the trade conflict.
Carney said Canada had already committed nearly $25 billion in support over the previous 18 months and would introduce additional measures as the latest tariffs took effect.
The government is also pursuing a broader strategy of reducing Canada’s dependence on the U.S. market by expanding trade relationships elsewhere.
Carney has pointed to Canada’s existing free-trade arrangements and efforts to open additional export markets as part of that strategy.
Provinces Rally Behind Canadian Businesses
Provincial leaders have largely backed Ottawa’s decision to respond firmly to the new U.S. tariffs.
Ontario Premier Doug Ford has supported the federal government’s position, particularly given the potential consequences for industries such as manufacturing, steel and automobiles.
Other provincial leaders have similarly called for assistance for workers and companies expected to bear the brunt of the dispute.
The broad political backing reflects the scale of the challenge facing Canada’s export-dependent economy.
‘We Just Need to Know What the Path Forward Is’
For business owners, the central issue is increasingly becoming predictability.
Companies can alter suppliers, explore new markets or adjust prices. What is much harder is operating when tariff rules can change with little warning.
That uncertainty is particularly challenging for small businesses that lack the financial reserves of major corporations.
As Canada prepares its retaliatory measures and continues looking for alternatives to its heavy reliance on the U.S. market, businesses across the country are waiting to see how long the latest trade confrontation will last.
For owners like Onisto and Stewart, the message is straightforward: they need stability to make decisions.
The tariff dispute is no longer simply a matter of government negotiations. For thousands of Canadian businesses, it is becoming a question of how to keep selling, investing and employing people while the rules of cross-border trade continue to shift.
