Canada-US Tariffs: How Trudeau, Ford, and Trump’s Policies Affect Small Businesses

23 hours ago7 min read

Canadian and U.S. flags flutter against a clear blue sky. The Canadian flag shows a red maple leaf; the U.S. flag displays stars and stripes.

The Latest Trade Tensions

The long-standing trade relationship between Canada and the United States is facing renewed strain as the U.S. has imposed fresh tariffs on Canadian exports. On March 4, 2025, the U.S. administration introduced a 25% tariff on Canadian exports and a 10% tariff on Canadian energy products, citing concerns over drug trafficking and illegal immigration (PMO Canada). In response, Canada has retaliated with a 25% tariff on $155 billion worth of U.S. goods, implementing an immediate $30 billion in tariffs with the potential to expand to $125 billion if the situation persists (Government of Canada).

The situation has sparked concern among Canadian small businesses, which heavily rely on trade with the U.S. for imports, exports, and overall economic stability.

Political Reactions: Trudeau &. Ford vs. Trump

The escalating trade war has elicited strong responses from political leaders on both sides of the border:

President Donald Trump has defended the newly imposed 25% tariffs on Canadian imports as part of his "America First" trade policy, asserting that they are necessary to address trade imbalances and strengthen U.S. industries. He justified the tariffs by citing concerns over drug trafficking and illegal immigration, particularly focusing on the flow of fentanyl into the U.S. Trump has also suggested that Canada could avoid these tariffs by becoming the 51st U.S. state, a notion that has been met with strong opposition from Canadian leaders

Prime Minister Justin Trudeau has condemned the U.S. tariffs as "unjustified and unacceptable," stating that Canada will not back down and will implement countermeasures to protect Canadian businesses. On March 4, 2025, Canada imposed 25% tariffs on C$30 billion worth of U.S. goods, with plans to extend these measures to an additional C$125 billion if the U.S. tariffs remain in place. Trudeau emphasized that Canada would "never become the 51st state" of the U.S., highlighting the nation's sovereignty and resilience.

Ontario Premier Doug Ford has taken a robust stance against the U.S. tariffs, implementing several retaliatory measures to protect Ontario's economy. Ford announced the cancellation of government contracts with U.S. companies, including a $68 million deal with Starlink, Elon Musk's satellite internet service. He also directed the Liquor Control Board of Ontario to remove American alcohol products from its shelves and threatened to cut off electricity exports to the U.S., stating that Americans "need to feel the pain" of their trade policies. Ford asserted that "there is no halfway" when it comes to defending Ontario’s businesses, indicating a firm commitment to countering the economic impact of the tariffs.

The ongoing Canada-US tariffs dispute, driven by the policies of Trudeau, Ford, and Trump, is creating economic uncertainty, leaving small businesses in Canada struggling with rising costs and supply chain disruptions.

How Small Businesses in Canada Are Affected

1. Increased Costs of Imports

Many Canadian small businesses rely on importing raw materials, machinery, and finished goods from the U.S. The recent imposition of a 25% tariff on Canadian exports and a 10% tariff on Canadian energy products by the U.S. has led to increased costs for these businesses. These higher expenses may force businesses to raise prices for consumers, potentially reducing competitiveness and affordability. The Canadian Chamber of Commerce has criticized these tariffs, stating that they could lead to economic downturns and job losses in both Canada and the U.S. (chamber.ca)

A survey by the Ontario Chamber of Commerce revealed that two-thirds (66%) of respondents expect U.S. tariffs on Canadian goods to negatively impact their businesses. The anticipated challenges include increased costs of raw materials, decreased sales, changes in customer demand, and supply chain disruptions. Additionally, 56% of businesses expect Canadian tariffs on U.S. goods to adversely affect their operations. (occ.ca)

2. Export Challenges

For small businesses exporting to the U.S., the 25% tariff on Canadian goods makes their products more expensive for American buyers, potentially leading to a decline in sales. Industries such as manufacturing, agriculture, and retail are among the hardest hit. For example, Ontario’s auto parts industry, which heavily depends on U.S. exports, faces significant challenges as American companies may shift to domestic suppliers. Similarly, Canadian farmers confront disruptions in agricultural trade, as the U.S. is a major market for products like wheat, beef, and dairy.

3. Supply Chain Disruptions

The escalating trade tensions have led to uncertainties in supply chains. Many Canadian businesses depend on cross-border trade to source essential components, and sudden tariff hikes can force them to seek alternative suppliers, often at higher costs. Industries such as construction, food production, and high-tech manufacturing are especially vulnerable, as they require seamless integration with U.S. supply chains. Small manufacturers have reported delays in shipments and increased paperwork requirements, further complicating operations.

4. Currency Volatility

Trade tensions often lead to currency fluctuations, with the Canadian dollar already showing signs of depreciation. A weaker CAD makes imports even more expensive, compounding financial pressure on small businesses that rely on U.S. suppliers. The Bank of Canada has warned that ongoing trade disputes could result in a prolonged devaluation of the Canadian dollar, affecting purchasing power and increasing inflationary pressures on essential goods. This could lead to higher borrowing costs for businesses reliant on foreign investment.

These factors collectively pose significant challenges to Canadian small businesses, necessitating strategic adjustments to navigate the evolving trade landscape.

The Bigger Picture: Economic Impact Beyond Small Businesses

The ongoing trade war between the United States and Canada extends its ramifications beyond small businesses, affecting various sectors and the broader economy.

Consumer Price Increases

The imposition of tariffs leads to higher import costs, which are often passed on to consumers. This escalation results in increased prices for everyday goods, including groceries, gasoline, and automobiles. Such inflationary pressures can erode purchasing power and dampen consumer spending, potentially slowing economic growth.

Industries at Risk

Several key sectors are particularly vulnerable to the adverse effects of the trade war:

Manufacturing: Industries reliant on cross-border supply chains face increased production costs due to tariffs on imported components, leading to potential revenue losses and job cuts.
Agriculture: Farmers encounter reduced export opportunities and lower commodity prices as retaliatory tariffs diminish access to crucial markets.
Energy: Tariffs on energy imports can disrupt the sector, leading to increased costs for consumers and businesses alike.

Impact on Sports and Entertainment

The sports and entertainment industries are not immune to the repercussions of the trade conflict:

National Hockey League (NHL): The NHL has expressed concerns over the tariffs, citing potential impacts on ticket prices and cross-border player contracts.
Consumer Sentiment: The trade tensions have fueled nationalistic sentiments, influencing consumer behavior and potentially affecting attendance and viewership in sports and entertainment events.

What Comes Next?

As Canada and the U.S. navigate ongoing trade negotiations, small businesses must prepare for potential outcomes that could significantly impact their operations:

Negotiated Tariff Reductions: Drawing from historical precedents, diplomatic efforts may lead to a de-escalation of tariffs. Such resolutions could restore more favorable trade conditions, alleviating the current financial pressures on small businesses.
Further Escalations: Conversely, the situation could intensify, with both nations imposing additional tariffs. This escalation would likely exacerbate supply chain disruptions and increase costs, making it imperative for businesses to develop contingency plans.
Government Support Initiatives: In response to the challenges posed by tariffs, governments might introduce support packages to assist affected businesses. For instance, the Canadian Federation of Independent Business (CFIB) recommends expanding work-sharing programs and implementing tariff rebate initiatives to mitigate the impact on small and medium-sized enterprises.

To navigate this uncertain trade environment effectively, small businesses should consider the following strategies:

Diversify Supply Chains: Reducing reliance on U.S. suppliers by sourcing materials from alternative markets can mitigate risks associated with tariffs.
Explore New Markets: Identifying and entering non-U.S. markets can offset potential declines in sales due to reduced access to American consumers.
Leverage Government Programs: Utilizing existing economic support programs can provide financial relief and resources to adapt to changing trade dynamics. The Government of Canada offers various supports, including financing and advisory services, to assist businesses during such transitions.

By proactively adopting these measures, small businesses can enhance their resilience and better position themselves to thrive amidst the evolving landscape of U.S.-Canada trade relations.

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Conclusion: Canada-US Tariffs: How Trudeau, Ford, and Trump’s Policies Affect Small Businesses

The Canada-US tariffs are creating widespread economic uncertainty, particularly for small businesses in Canada struggling with rising costs and disrupted trade. As Trudeau, Ford, and Trump take firm stances, businesses must brace for long-term instability. Whether through government policies, industry advocacy, or strategic adjustments, the coming months will be crucial in determining how Canadian businesses navigate this escalating trade conflict.