Starting in early 2025, Canadian businesses, both small and large, have faced significant challenges due to escalating trade tensions with the United States. Watching the ever-changing headlines from one minute to the next is nerve racking and leaves everyone wondering what steps can be taken to help protect yourself and your business in uncertain times.
Leverage Government Support Programs
The Canadian government has introduced measures to support businesses affected by
U.S. tariffs. A financial aid package exceeding $6.5 billion was announced in March 2025 to assist companies in diversifying their export markets and cushioning losses. As reported so far, but not yet unveiled by the government, this support includes low-interest loans and assistance in accessing new international markets, reducing reliance on the U.S.
Summary of the support as of March 7, 2025:
- $5 billion for exporters for two years
- $1 billion for agriculture and food industry
- $500 million set aside for low-interest loans
- Tweaked rules for job insurance (EI) to prevent layoffs
Additionally, the Business Development Bank of Canada (BDC), which is a crown corporation wholly owned by the Canadian government, dedicated to supporting Canadian entrepreneurs and small to medium-sized enterprises through financing, capital, and advisory service, offers resources to help businesses navigate tariff uncertainties. These include expert advice, flexible financing solutions, and tools to build resilience.
Engage with Licensed Insolvency Trustees
Financial distress requires professional guidance. Licensed Insolvency Trustees (LITs) offer expert advice on debt management and insolvency options. As LITs, we can assist businesses in restructuring debts, negotiating with creditors, and exploring alternatives to bankruptcy, such as proposals to creditors. Engaging with an LIT can provide a clear path to financial recovery and help Canadian businesses continue operations during challenging periods.
Adopt Financial Prudence
What can business and individuals do now in preparation for what may be additional and ongoing uncertainty? Start by taking a critical look at your current financial situation and potential risks and vulnerabilities. Consider and implement strategies such as reducing expenses, improving cash flow management, and renegotiating terms with suppliers to enhance liquidity.
Regular financial assessments and prudent budgeting enable businesses (and individuals) to adapt swiftly to changing economic conditions. The foundational principle of spending less than you make is essential for any healthy, financially stable entity – either a business or an individual. Without setting aside cash at the end of the month, financial planning for rainy days becomes challenging. Implementing a system to track income and expenses is vital for effective cash flow management.
Diversify Supply Chains and Markets
To mitigate the impact of U.S. tariffs, Canadian businesses are exploring alternative suppliers and new markets. The federal government's aid package includes support for companies to diversify their export markets, reducing reliance on the U.S. Yes, diversifying is a long-term prospect, but, unfortunately, tariffs may not be a short-term pain. Don’t plan on the tariffs or the negative political landscape changing anytime soon. This may be our new normal in Canada and, for long term survival, all business may have to look to markets they have not had to consider in the past.
Embrace Economic Nationalism
A growing movement encourages Canadians to support domestic products and services. This "Buy Canadian" sentiment not only fosters national pride but also presents an opportunity to strengthen ties to local businesses. Small businesses can capitalize on this trend by highlighting their Canadian-made products and emphasizing local sourcing in their marketing efforts. For example, Moosehead Breweries introduced a "Presidential Pack" of 1,461 cans of its Canadian Lager, symbolizing one beer for each day of the U.S. presidential term, resonating with consumers' patriotic sentiment. Moosehead initially made just five Presidential Packs, each priced at $3,490 plus tax and deposit. The first one sold within 11 minutes, and all five sold within 24 hours. The company then made another five, which also sold out.
Innovate and Adapt
Challenging times often spur innovation. Businesses can explore new product lines, adopt digital technologies, or pivot to meet emerging demands. For instance, Tinhouse Brewing Company in British Columbia adjusted its supply chain by sourcing more Canadian grain and obtaining cans from China instead of the United States, reflecting adaptability in response to tariffs.
Case Study: Province of Canada
The apparel brand Province of Canada (the name of this Canadian apparel company is bound to confuse the government officials in Washington... or maybe just a certain few) experienced a surge in sales as consumers increasingly sought locally made products amid tariff tensions. Co- founder Julie Brown stated in a news report, that the company’s sales doubled in February, leading to considerations of hiring more staff and expanding product development.
However, the company also faced challenges, as some of its cotton is sourced from the U.S., prompting concerns about supply chain disruptions. This scenario underscores the dual impact of tariffs, offering opportunities for growth, while necessitating strategic adjustments.
In conclusion, while the current tariff turmoil presents significant challenges, Canadian businesses have a range of strategies at their disposal to navigate these uncertain times. By leveraging government support, seeking professional financial advice, practicing financial prudence, diversifying markets, embracing localism, and fostering innovation, businesses can not only survive but also position themselves for future growth.