One-third of Canadian small businesses plan to scale back US efforts amid trade uncertainty
Canadian small business owners are redirecting their suppliers and investments to Canadian and international markets outside the US in response to disruptions caused by US-Canada tariffs, according to new survey data from the Canadian Federation of Independent Business (CFIB).
CFIB reported that 32 percent of business owners have already moved to domestic suppliers or markets, while 27 percent intend to increase investment within Canada.
Another 33 percent plan to reduce efforts in the US over the next six months.
CFIB’s vice-president of research and chief economist Simon Gaudreault said, “Businesses need more certainty, it's simple as that. As one business owner told us, the unpredictability of the current situation is making surviving the pandemic look like a walk in the park.”
He noted that the upcoming April 2 reciprocal tariffs have left the long-term direction of the US-Canada trade conflict unclear.
“For some businesses, making drastic changes is not feasible, but others are taking actions to offset the current impacts.”
Alongside shifting markets, small firms are delaying or cancelling expansion plans, promoting Canadian-made products, and seeking alternatives abroad.
Despite these efforts, only three in 10 businesses believe their actions will help offset the impact of the trade dispute.
Survey results also show that 70 percent of small firms support Canada's retaliatory tariffs. However, nearly nine in 10 report difficulty with business planning under current trade conditions.
CFIB found that 47 percent of small businesses no longer see the US as a reliable trading partner. While most US exporters offer CUSMA-compliant goods, 30 percent of business owners remain unsure about compliance.
Half of respondents said they would benefit from government assistance in handling CUSMA-related paperwork.
Nearly one-third of Canadian exporters use the US de minimis rule, which allows duty- and tariff-free exports of up to US$800 in goods to American consumers.
CFIB flagged that this rule may be subject to future changes.
“Small business optimism is at historically low levels,” said CFIB president Dan Kelly.
He called on all political parties to include small business policies in their platforms during the federal election, including commitments to eliminate internal trade barriers and reduce the tax burden.
He added that restoring business confidence is essential to strengthening the economy in the uncertain months ahead.
| The ‘US-Canada Trade War Survey’ launched on March 13, 2025, and remains ongoing. The results reflect responses from 2,957 CFIB members collected as of March 20. A probability sample of this size would have a margin of error of ±1.8 percent, 19 times out of 20. |
