One in Five Canadian Businesses Faces Closure Amid Trade Tensions

A recent report by the Canadian Federation of Independent Business (CFIB) reveals alarming trends among Canadian business owners, with one in five indicating they may not survive the next six months. The ongoing trade tensions, particularly stemming from tariffs imposed by the United States, are cited as a significant factor in this grim outlook.

In British Columbia, the impact is particularly severe, with approximately two-thirds of businesses engaged in direct trade with the U.S. When including those who rely on U.S. imports indirectly, the figure rises to 80 percent. Ryan Mitton, the CFIB’s director of Legislative Affairs for B.C., noted that sectors such as steel and lumber are facing the most significant challenges. He stated, “We also heard that one-third of businesses in B.C. have been impacted by steel tariffs, and one in five by softwood lumber tariffs, which is the highest rate among Canadian provinces.”

The uncertainty surrounding these tariffs is causing substantial distress. Mitton elaborated, “If a mill is being impacted by tariffs, it affects the surrounding small businesses as well, including local stores and suppliers.” This interconnectedness means that the repercussions of the trade war extend beyond large corporations to small businesses that serve local communities.

According to the CFIB, the broader implications of these trade issues are evident nationwide. Alongside the trade war, factors such as lowering revenues, increased operational costs, and supply chain disruptions contribute to the precarious situation. Mitton reported that one in three small businesses have experienced orders being paused, while a further one in four have seen orders cancelled due to the trade conflict.

To address these challenges, the CFIB is urging the federal government to take immediate action. Proposed measures include reducing small business taxes and providing a tariff rebate. Mitton emphasized that small businesses require assistance to cope with rising costs and unpredictable market conditions. “They need cost relief,” he said, suggesting that revenue from Canadian counter-tariffs should be returned to these businesses to help them endure the ongoing crisis.

As the trade negotiations between Canada and the U.S. continue, the CFIB encourages consumers to support local businesses. Mitton pointed out that decreased customer demand exacerbates the issue as people tighten their spending amidst economic uncertainty.

Trade discussions have seen delays, with key deadlines passing without resolution. Initially, a deal was anticipated by August 1, 2023, but U.S. President Donald Trump raised tariffs on Canadian exports not covered by the Canada-United States-Mexico Agreement (CUSMA) to 35 percent. In response, Prime Minister Mark Carney stated that Canada would only accept a “fair” deal and would continue negotiations.

The U.S. administration’s rationale for the heightened tariffs includes claims related to the cross-border flow of fentanyl, despite Canada accounting for only 1 percent of U.S. fentanyl imports. Carney reaffirmed that Canada is making substantial investments in border security to combat drug trafficking.

Meanwhile, Anita Anand, Canada’s Minister of Foreign Affairs, is set to meet with U.S. Secretary of State Marco Rubio in Washington, D.C., marking her first official engagement with the new administration. This meeting follows previous discussions aimed at resolving tariff issues, although progress has been limited.

With the future of many Canadian businesses hanging in the balance, the call for decisive action grows louder. As the trade landscape remains uncertain, the emphasis on local support and government intervention becomes increasingly critical for survival.