Majority of businesses exporting to U.S. expect to lose revenue, adopting wait-and-see position as tariff deadline nears: survey
With one week to go before proposed 50-per-cent U.S. tariffs could take effect, a new survey of small business exporters is sounding a stark alarm – not just about revenues, but about the hiring decisions and workforce plans underpinning thousands of Canadian companies.
The Canadian Federation of Independent Business (CFIB) surveyed 1,833 members between July 28 and August 6, 2026. The resulting report, Canadian SMEs and the Proposed U.S. 50% Tariffs, reveals a business and people-strategy problem that HR leaders at export-reliant organizations are facing under the cloud of the threatened U.S. tariffs.
The defining response among business surveyed is paralysis, according to Ryan Mallough, Vice President of Legislative Affairs at CFIB in Toronto. "A lot of investment decisions around hiring, expansion, new locations, new product lines, and that sort of thing are being put off because they're waiting to see what this is going to look like," says Mallough. "Do I want to expand now, or do I want to wait six months when it might look something different?"
Hiring and investment in the tariff crosshairs
Of the surveyed exporters sending goods to the U.S., approximately 40 per cent said they currently export products that fall under the scope of the proposed tariffs, which were announced by U.S. president Donald Trump last month and are scheduled to take effect on Aug. 19. Among those with affected products, 77 per cent expect to lose revenue if the levies proceed – and 35 per cent anticipate losing at least half of their revenues over the next 12 months, according to the CFIB report.
A separate Small Business Pulse 2026 survey by Merchant Growth, a Canadian business financing solutions firm, found that more than half of small businesses had already cut spending, and one in four had delayed hiring.
One wholesale business owner in Quebec described their bind directly in the CFIB survey: "We paid $150,000 in tariffs last year, significantly reducing our profits. Canadian suppliers cannot meet demand, leaving U.S. dependent on U.S. products while unable to absorb a 25-per-cent tariff increase. As a result, small businesses like ours must cut back on hiring and investment just to survive."
Anxiety over trade agreement protection
Mallough says the anxiety over this round of tariffs is more acute than what came before, for a specific structural reason. "These are the first tariffs that, at this broad of a level, seem to pierce the Canada–United States–Mexico Agreement (CUSMA), which has been pretty set in place up to this point," he says. "You've got businesses that have been operating business as usual with their American clients that are now suddenly being threatened with a 50-per-cent tariff, and that has them quite concerned because the pivot on something like that is not quick – if you're going to rejig your existing contracts or seek out new supply chains or new markets, that's not a fast process."
The threatened tariffs also come at the same time CUSMA talks continue between the three countries, with the U.S. musing about scrapping the agreement entirely.
“Despite the fact that we've had a little bit of runway in terms of [the latest] tariff threat, about a month, this is a surprise,” says Mallough. “Up to this point, this kind of thing [tariffs on CUSMA goods] hasn't happened, and I think the concern is if it can happen here, then what else? How reliable can a trade agreement be?”
Manufacturing in Ontario and Quebec is especially vulnerable, along with construction firms reliant on aluminum and steel crossing the border, according to Mallough. This pattern has already been borne out, with industries bearing the brunt of U.S. trade actions seeing declining or stagnant employment even as output pressures mount.
Market diversification and what it means for HR
Nearly 78 per cent of surveyed exporters believe a 50-per-cent U.S. tariff would make their products uncompetitive in the American market, and 75 per cent say they would move to reduce their reliance on U.S. customers — a dramatic signal given that about 85 per cent of Canada's exporters sent goods south of the border between 2006 and 2020 and the U.S. is historically the destination for about 75 per cent of Canadian exports overall, according to CIBC.
The first pivot most smaller-sized exporters are considering is domestic, says Mallough. "It's about two-thirds of businesses that are looking to pivot their operations and have been looking at new markets within Canada," he says. "That's why we put such a hard focus on reducing internal trade barriers and ensuring that labour and credentials are able to travel across borders in addition to goods and services."
That reorientation carries direct HR implications. Accessing new markets requires different capabilities, new supply chain contacts, and a different mix of skills. Tariff pressure has already begun to separate small business hiring intentions from those of larger employers — a gap the Aug. 19 deadline could sharply widen.
The human cost the data doesn't fully capture
Beyond the survey numbers, Mallough says there’s a cumulative human toll that aggregate data tends to obscure. "It's been a rough six years for small business owners," he says. "If this were the only thing that had been going on, that would have been stressful enough, but you've got elevated gas prices, the situation in the Middle East, high interest rates, supply chain challenges, and the pandemic itself. Small business owners' ability to absorb and weather these major events has been eroded over time."
He also raises concern about whether support programs are reaching the businesses that need them. "Our members tend to not know about them and they tend to have difficulty applying to them or qualifying for them – [support programs] are really more geared to some of the larger businesses," he says. "But our economy is very much an ecosystem. When you lose a business in the community, it's not just the business that suffers — the whole community suffers."
Canada–U.S. Trade Minister Dominic LeBlanc and Canada’s Chief Trade Negotiator Janice Charette are in Washington this week to discuss a deal for CUSMA and to address the threatened tariffs, but a deal before Aug. 19 is far from certain.
“When you're a business that's trading with the U.S., it's hard to say, ‘Let’s enter a new contract or renew the contract’ when the tariff situation on Tuesday might change on Thursday,” says Mallough. “Businesses will have to make moves and there will have to be a reaction if we see 50-per-cent tariffs come in.”
