Small businesses are bearing the costs of US tariffs to keep their customers, according to data from the Canadian Federation of Independent Business.
Almost 7 in 10 small businesses have paid a median of $9,000 in full tariff costs for imports from the US. Sixty-three percent either shouldered the costs of exports completely or split them with customers, with the median cost coming in at $22,500.
“It is clear that most small exporters have had to eat much of the cost of U.S. tariffs in order to keep their American customers,” CFIB president Dan Kelly said.
Last Friday August 1, US tariffs increased to 35 percent in a move that Kelly said “will harm small businesses on both sides of the border.”
“While it is good news that most Canadian exports will remain tariff free due to the CUSMA/USMCA exemption, the uncertainty alone will continue to take a toll on Canada's small businesses,” he said in a statement.
The CFIB has urged the Ottawa government to release the revenues earned from retaliatory tariffs and put them towards supporting small businesses – a move Prime Minister Mark Carney had vowed to make during his campaign.
“Many have been holding out, delaying critical decisions hoping for enough certainty to plan for the future. Without an immediate deal, many are facing some terrible choices, including laying off key workers,” Kelly said in a statement.
He explained that while a bad deal was “the worst outcome for Canada,” the second-worst scenario was the current Canada-US trade uncertainty faced by small business owners.
In a letter addressed to the federal government, the CFIB pitched the implementation of a rebate program for tariff-afflicted businesses, the short-term elimination of the 9 percent small business tax rate, and a reduction in employers’ employment insurance premium.
“So far, the federal government’s announced support measures and tariff exemptions have fallen short of bringing desperately needed cost relief,” said Corinne Pohlmann, CFIB’s executive vice-president of advocacy. “Although small businesses have been supportive of Canada’s counter-tariffs while discussions are under way, ongoing tariffs would have permanent consequences on small businesses and the broader Canadian economy.”
According to CFIB, billions have been collected in revenues from Canada’s tariffs on US imports. The federation also called for Ottawa to tackle unfinished business and drop business operations costs.