In trade wars, there are no winners.
Especially when it comes to a small business.
A survey by the Canadian Federation of Independent Business (CFIB) reveals nearly two-thirds of small firms are being negatively impacted by the uncertainty of the U.S-Canada tariff war.
Based on 1,064 responses earlier this month, the survey revealed 62% of small companies are taking some sort of financial hit, about a quarter indicate no impact yet, while 12% are unsure how it will affect them.
Tariffs threatened and imposed by U.S. President Donald Trump on Canadian goods and reciprocal measures by the Liberal government in Ottawa — as well as provincial actions — will hurt the economy across the country, said Simon Gaudreault, CFIB chief economist and vice president of research.
“It will have a negative impact on the Canadian economy, whether you are in Toronto or any other part of the country,” he said. “We are too interconnected with the U.S.”
In Toronto, a large segment of businesses rely on financial services, which Gaudreault calls a barometer of the overall economy.
“You’re going to have a lot of investments that are not going to be made,” he said. “You’re going to have a lot things that are going to be put on pause. Jobs that maybe will be lost or new hires won’t be made. All of this is going to impact our economy.”
Gaudreault said a continuing trade war will plunge the Canadian economy into tougher times.
“Overall, for most businesses, this is going to be a very negative result. Most likely, we’re going to see a recession in Canada if the trade war goes on.”
While it is early days, Gaudreault said a recent CFIB questionnaire found very few small businesses have decided to close up shop or relocate as a vast majority of entrepreneurs look to pivot away from the U.S. market or American products.
“For a lot of businesses right now, they’ve been able to mitigate (the effects of tariffs),” he said. “Certainly (they) have put a lot of things on hold, but they are not yet at a stage where the businesses are closing tomorrow or they’re firing or laying off all of their workers.”
Giles Gherson, president and CEO of Toronto Region Board of Trade, said in an emailed statement that the “economic storm is still brewing” after Trump last week signed off on 25% tariffs on Canadian goods entering the U.S. which are not protected by the Canada-United States-Mexico Agreement.
“These measures will have punishing consequences for businesses, workers, and consumers on both sides of the border. Governments at all levels must now move swiftly and vigorously with immediate temporary measures to safeguard businesses directly affected by the U.S. tariffs and to buttress the resilience and self-reliance of our economy for the future.”
Gherson added that the tariff threat has shown how complacent Canada has become on the country’s own productivity.
“We need to go full-bore on economic growth, retool in a way we haven’t since the post-war era.”