Tariffs war: Groups call for support for small employers

Government told to 'ensure any Canadian tariffs avoid broad impacts on Canadian SMEs'

Tariffs war: Groups call for support for small employers

Just days after threatening a trade war, U.S. President Donald Trump has agreed to hold off imposing 25% tariffs on Canada and Mexico for 30 days.

And while the Canadian government has taken its stand against Trump, small businesses that are caught in the crossfires are pleading for help from the federal government.

“While we recognize our government will need to respond, we urge government [to] ensure any Canadian tariffs avoid broad impacts on Canadian SMEs,” said Dan Kelly, president, and Corinne Pohlmann, executive vice-president for advocacy, at the Canadian Federation of Independent Business (CFIB).

Trade is not just a big business issue, as over half (51%) of Canada's small business are involved in importing or exporting directly with the U.S., they explained in a statement.

“Should Canada respond with tariffs of our own, small firms – already operating on razor-thin margins – will have no choice but to raise prices. This will lead to even weaker consumer demand.”

Following Trump’s decision to impose tariffs on Canada beginning Feb. 4, the Canadian federal government said it is moving forward with 25% tariffs on $155 billion worth of goods in response.

Taxes, red tape, internal trade barriers

The CFIB officials also called on the Canadian government to reduce taxes and red tape and “implement a mutual recognition agreement to address internal trade barriers”.

“As President Trump has plans to cut red tape and reduce taxes, Canadian governments will also need to make sure our small businesses are well-equipped to stay competitive with their American and global counterparts,” they said.

And should the US tariffs be in place for an extended period of time, governments should ensure any support programs “do not repeat the mistakes of pandemic support programs” like the Canada Emergency Response Benefit (CERB), said Kelly and Pohlmann. 

Criticism of US tariffs

Meanwhile, the Aluminium Association of Canada criticized the 25% tariffs previously announced by the Trump administration, describing them as “unfortunate and highly disruptive”.

"We are disappointed, but we were expecting this and are ready for it," said Jean Simard, president and CEO of the group. "This situation will unfortunately impact workers and consumers in America with the immediate increase on the price of aluminium."

Canada’s 9,500 Canadian aluminium workers produce the metal that is processed, transformed and fabricated into parts, components, and everyday products by more than 500,000 “well-paid American manufacturing workers,” generating more than $200 billion in economic output in the US economy alone, according to the group.

The Mining Association of Canada also emphasized how the tariffs will have a negative effect on mineral supply chains.

"Canada has long been a dependable partner, providing certainty to U.S. manufacturing and defense industries by serving as a major supplier of minerals and metals. In 2022, 52% of Canada's mineral exports – valued at over $80 billion – were destined for the U.S.,” said the group.

“The imposition of tariffs on Canadian minerals and metals products runs counter to American national security and economic interests. These tariffs will disrupt the essential flow of mineral and metal resources, exacerbate vulnerabilities in critical mineral supply chains that both nations have been working to address and raise the costs of doing business for our U.S. customers.”

The Mining Association of Canada also called on governments to “use this moment to address long-standing barriers to Canadian economic growth, including the removal of internal trade barriers, complex, expensive and lengthy regulatory processes and uncompetitive tax policies”. 

“It is time for all governments to double down to create the conditions for improved competitiveness, investment, productivity and prosperity,” it said.

Tackling regulatory barriers to internal trade

At the Committee on Internal Trade (CIT) meeting, transport and Internal Trade Minister Anita Anand and her provincial and territorial counterparts have discussed possible moves to eliminate regulatory barriers to internal trade, encourage free movement of labour and further standardize regulations across Canada.

The discussion focused on the following areas:

  • Adoption of mutual recognition for goods and services across Canada so that a good or service sold in one jurisdiction can be sold in another, without the need to satisfy additional requirements.
  • Improved labour mobility so a registered worker can work in any location across the country without delay.
  • Improving the Canadian Free Trade Agreement by reducing exceptions and addressing other sectoral priorities.

Trump’s decision to put a halt on the tariffs came after Prime Minister Justin Trudeau agreed to reinforce his country's border with the US to clamp down on migration and the flow of the deadly drug fentanyl, according to a BBC report.

With Canadians expecting job cuts amid the tariffs issue, 80% want the Canadian federal government to support people who would be impacted by job losses, according to a previous report.