The damaging impact the U.S.-Canada trade war could have on B.C. businesses
B.C. businesses are bracing for the latest escalation in the U.S.-Canada trade dispute.
Yesterday, Canada’s counter-tariffs officially took effect on $27.6 billion worth of U.S. imports, in response to the U.S.’s tariffs on $27.6 billion in Canadians goods on Aug. 22.
The U.S.’s targeted tariffs on Canadian products will directly impact B.C. businesses in the softwood lumber industry and could result in the loss of thousands of jobs, but the Canadian counter-tariffs could possibly impact a wider array of companies, given that many import products from the U.S.
According to Merchant Growth, a Canadian financing company, half of B.C. businesses are connected to the U.S. in some way, be it through suppliers, customers, or partners.
Merchant Growth surveyed B.C. small businesses earlier this summer and found that 56 per cent of those surveyed already reported cutting spending, 50 per cent had raised their prices, and 31 per cent decided to delay hiring.
Hash Aboulhosn, the chief growth officer at Merchant Growth, said that this latest round of tariffs is “yet another thing” on the list of challenges B.C. businesses have dealt with, from high interest rates, to a declining housing market, to the first round of tariffs, to the war in the Middle East impacting energy prices.
“We‘ve been through a period now of a lot of uncertainty,” he told Daily Hive in an interview.
Canada’s counter-tariffs mean that U.S. based imports become that much more expensive, making those U.S. products much less competitive in Canada.
Aboulhosn said it means that a business that previously bought something from the U.S. which now has a tariff slapped on it will likely try to switch to a different supplier.
“And so it’s not going to make these products 50 per cent more expensive. It’s going to make them whatever the next most expensive product or alternative was,” he said.
“The reason why businesses were buying from the U.S. is probably that that was the cheapest or the best product. And so if they have to move to the next cheapest or best, it’s probably, initially at least, going to be a bit more expensive, which is why you are going to see some degree of inflation. But it’s probably not as high as a 25 or 50 per cent counter-tariff.”
But Aboulhosn said that the U.S.’s actions against Canada “unfortunately, do require a response.”
“If we don’t respond, then it’ll be a pretty good signal that you know Canada can be abused again and again and again,” he said.
Aboulhosn said that the “silver lining” is that the trade war is forcing Canada to find trade partners outside the U.S. Merchant Growth found that 25 per cent of B.C. businesses have stopped working with U.S. suppliers, and 19 per cent had switched to a Canadian or non-U.S. supplier.
“We’re seeing the economy be a bit stronger than it was previously expected, and those revisions are going higher, so I think there are some green shoots.”
Since April 2, 2025, when U.S. President Donald Trump first instated his sweeping tariffs, Aboulhosn said that most businesses have learned that they need a contingency plan.
“You can’t have all your eggs in one basket,” he said. “They’ve almost certainly learned to keep a bit of a buffer around.”