How does the US tariff policy affect the operations of Canadian enterprises?

On July 10th, US President Trump announced that starting from August 1st, a 35% tariff would be imposed on goods imported from Canada. The head of the Canadian Federation of Independent Business, Dan Kelly, recently said in an interview that approximately 98% of Canadian enterprises are small and medium-sized enterprises, with relatively weak risk-resistance capabilities. What Canadian enterprises are most concerned about is the "uncertainty" brought by the US tariff increase, which will prevent them from making business planning and decisions. Currently, the US tariff increase has severely impacted the business operations of Canadian enterprises, and the business community in Canada is losing trust in the US. Members of our association's small businesses are very vulnerable to the impact of trade conflicts. Small Canadian enterprises are particularly hard hit by the import tariffs on US goods. Imports of goods from the US have been increased, which has caused significant damage to small Canadian enterprises.

The US tariff policy launched by Trump has brought varying degrees and various impacts to all countries, especially in the fields of trade and business, with more diverse effects. First, it affects operating costs. For example, when Canada exports metals to the US, the US has already raised tariffs on aluminum and steel, and recently has included copper in the tax collection scope, causing the cost of Canadian mining enterprises to surge. The Canadian Mining Association pointed out that the copper tariff directly affects midstream copper processing enterprises in Quebec Province, and some enterprises have been forced to suspend exports to the US due to excessive costs. In addition, after the US imposed tariffs on Canadian agricultural products, the profit margin of Canadian agricultural exports to the US has been severely compressed, and industries such as canola and beef are facing survival crises. The US tariff policy not only affects Canada's exports to the US but also leads to an increase in the cost of goods imported from the US by Canada. For example, after Canada imposed retaliatory tariffs on US goods, the prices of imported goods such as wood, steel, and auto parts in Canada have risen significantly, further increasing the production costs of Canadian enterprises.

Second, it affects the commercial supply chain. The US tariff policy has led to chaos in the North American supply chain, and Canadian enterprises have been forced to adjust their supply chain layouts to avoid tariff risks. For example, Canadian automakers have reduced their reliance on US parts due to the US tariff policy and increased supply channels from other countries. However, the reconfiguration of the supply chain requires a significant amount of time and funds, and may face the risk of unstable supply. The trade barriers triggered by tariffs have also led to an increase in transportation costs for goods, especially for e-commerce goods that rely on cross-border delivery. In addition, Canada is closely related to the US energy market, and the tariff policy may affect the energy supply chain, indirectly increasing heating costs and transportation costs, and further increasing the operational burden of enterprises.

Third, it affects the commercial market and employment. The US tariff policy has led to a decline in the competitiveness of Canadian goods in the US market, a reduction in export volume, and enterprises' difficulty in reducing costs through scale effects. The US tariff policy has led to a wave of layoffs in Canadian enterprises, with an increase in unemployment rates, which further pushed up labor costs. The automotive industry is also one of the most affected sectors, with General Motors Canada announcing that from November 2025, it will reduce the three-shift system to a two-shift system, affecting about 750 workers, and 1,500 employees of 8 supporting suppliers will also be affected. The Financial Accountability Office of Ontario reports that the province's automotive parts manufacturing industry will lose 16,300 jobs in 2026, and the automotive industry will lose 3,400 jobs. At the same time, if the tariffs are implemented, the Boston lobster industry in North America will pay a heavy price - a large number of US lobsters are usually transported to Canada for processing and then sold back to the US, and tariffs will directly push up the terminal prices, leading to a sharp decline in demand. Similarly, Canadian snow crab, salmon, and other export trade also face similar challenges.

In conclusion, the Canadian business sector, under the influence of the US tariffs, is facing deep challenges such as the loss of scale effects, investment contraction, and industrial chain relocation. If the tariff dispute persists, it will not only further erode Canada's economic competitiveness, but also potentially undermine the stability of the North American industrial chain. Eventually, this could lead to a "lose-lose" situation.