Revenue is expected to decline for 77 percent of Canadian exporters to the US whose goods fall under the 50 percent tariffs the US intends to impose next week, according to the “Survey on Proposed New U.S. Tariffs on Canadian Products” report published by the Canadian Federation of Independent Business.
Of these exporters, 35 percent anticipate the revenues will nosedive by at least 50 percent.
“Few small firms can absorb a 50 percent tariff, and few can pass that cost on to customers while staying competitive. All eyes are on our negotiations with Washington as the stakes are very high for Canadian SMEs,” said Dan Kelly, CFIB president, in a statement.
Thirty-two percent of exporters to the US said they were extremely concerned about the new tariffs. Forty percent of small organizations said they would be impacted.
The tariffs most significantly affect the following businesses:
- Machinery and equipment
- Wood, forestry and building products
- Plastics, polymers and packaging
- Agricultural, food and beverage products
- Arts, jewellery and creative products
Kelly noted that many businesses had expected that products compliant with the Canada-United States-Mexico Agreement would be protected from tariffs.
“The prospect of losing sales, slashing prices, or having to pivot to new markets altogether, is generating a lot of small exporter anxiety in the lead-up to August 19,” he said. “The small studio in Ontario shipping paintings to a gallery in New York, or a sawmill in BC shipping panels to a builder in Seattle is being walloped by the 50 percent tax threat. If the tariffs come into effect next week, they will cause massive dislocation for small businesses that rely on US clients and American buyers that rely on Canadian suppliers.”
The “Survey on Proposed New U.S. Tariffs on Canadian Products” obtained feedback from 1,833 respondents from July 28 to August 6.
Earlier this month, the Canadian Chamber of Commerce’s Business Data Lab released a report indicating that due to declining business confidence, low demand, and continuous uncertainty caused by the tariff threat, Canadian businesses had paused investments. BDL vice president Patrick Gill warned that investment dropoff would cause productivity, competitiveness, and long-term growth to halt.
A recent KPMG report revealed that 66 percent of businesses have amended prices in consideration of tariff costs; 31 percent of these accounted for all tariff costs. Sixty-five percent advocated for the federal government to be “transactional and dispassionate” in its US negotiations, having flagged the situation as “the new normal.” Moreover, 26 percent of businesses are either exporting or plan to export to countries with which Canada has inked a trade deal.