Separate reports highlight the pressure Canadian businesses are facing
When President Trump announced that tariffs would be placed on many of the goods that Canadian businesses export to the US, the impact was theoretical. Now it is a reality.
Talk of finding new markets and campaigns to drive domestic sales of Canadian goods are positive, but the vital market south of the border cannot simply be replaced, causing pain for businesses of all sizes, as highlighted by two new reports.
Firstly, Canadian Manufacturers and Exporters (CME) which warns that, even a promise by Carney and Trump that an economic and security agreement will be in place within 30 days, Canada's industrial base continues to suffer escalating damage. Recent stats show that Canada’s manufacturing sector recorded its sharpest monthly decline since late 2023, as US tariffs and growing global trade tensions weighed heavily on key industries, according to new data released by Statistics Canada.
CME’s research found that three quarters of manufacturers say they are suffering tariff damage that are leading to cancelled or delayed investment plans and hiring freezes or layoffs. The pain is not just from the US side, Ottawa’s retaliatory tariffs are hiking input costs and disrupting supply chains and sourcing.
"The results are clear: tariffs are continuing to inflict serious damage on Canadian manufacturers and their workers—particularly in the steel, aluminum and auto sectors," said CME President & CEO Dennis Darby. "We urge the federal government to build on recent discussions between the President and the Prime Minister to secure a deal for Canada that removes these unjustified trade barriers."
While CME members include large businesses, 85% are SMEs that collectively account for 90% of Canadian exports. The manufacturing sector accounts for over 9% of GDP, employs 1.8 million Canadians, and generates 60% of the country's total goods exports.
A separate survey from the Canadian Federation of Independent Business also highlights the challenging environment that small businesses are operating in, especially as we enter a key period for tourism.
"For many businesses, summer is a make-or-break season. Tourism operators in particular count on summer revenues to get ahead of their debt and high costs," said Louis-Philippe Gauthier, CFIB's vice-president for the Atlantic region.
Six in ten respondents are concerned that the US-Canada trade dispute will be bad for business this summer and 37% have noticed changes in tourists' behaviour such as choosing more affordable options.
But there is some good news; 58% of businesses are seeing growing interest from Canadian travelers and CFIB’s research shows growing expectation of people vacationing in their own province or within Canada.
"With more Canadians looking to stay within the country this summer, now is a great opportunity to explore our local businesses and communities and keep the loonies local. Every time Canadians choose to shop at a local small business, 66 cents of every dollar stays in the local economy," Gauthier added.
