Canada's counter-tariffs are hurting small businesses. Even so, many still support them

Troyhann Santos checks the federal government's latest list of counter-tariffs and makes a crushing discovery. Starting immediately, she'll have to pay a 25 per cent tariff on most merchandise coming into her lacrosse equipment store, Lax Shack, in Pickering, Ont.

"To get hit with something like this is terrifying," said Santos. "It's a terrible gut punch."

Billions of dollars and thousands of jobs are on the line as Canadian businesses grapple with U.S. President Trump's tariffs, the bulk of which are set to take effect on April 2. 

Now, some businesses unaffected by Trump's tariffs are learning that they won't emerge unscathed from the trade war, because goods they import from the U.S. are getting hit with Canada's counter-tariffs. 

The problem is especially concerning for small businesses, which often don't have deep pockets to help them weather the storm. 

Last week, the federal government imposed its first round of 25 per cent retaliatory tariffs on $30 billion worth of American goods, such as many types of food and appliances. 

On Thursday, after Trump imposed tariffs on steel and aluminum exports, Canada hit back with more tariffs, this time on $29.8 billion worth of U.S. goods. Targets include U.S. steel, aluminum, some electronics and — unfortunately for Santos — sports equipment.

Almost all of the lacrosse gear she sells, including sticks, balls and nets, is imported from the U.S.

"We have shipments that are coming in on a daily basis, so this will affect us immediately," said Santos. "We're going to have to increase our prices to reflect that 25 per cent increase."

She's not the only small business caught in the crossfire.

Cluck Clucks, a small but growing fast food chain in the Toronto area, says the counter-tariffs could hurt its expansion plans. 

Each Cluck Clucks requires between six and eight deep fryers to serve up its specialty: fried chicken. 

The fryers, which cost up to $27,000 each are made of steel and shipped from the U.S. Because Canada's counter-tariffs include cooking appliances made of steel, Cluck Clucks believes it will now pay 25 per cent more for each new purchase.

"We're expecting our costs to go up significantly," said Raza Hashim, Cluck Clucks' CEO. "So, overall, just not a good situation for us."

He adds that Canada doesn't manufacture deep fryers, so he can't solve the problem by switching to a domestic supplier.

Small businesses support counter-tariffs

The Canadian Federation of Independent Business (CFIB) says many small businesses may be affected by the counter-tariffs. The federation surveyed 2,500 independent businesses last month and almost half (47 per cent) said they import goods from the U.S.

"They are super concerned," said Simon Gaudreault, CFIB's chief economist. "We're talking here about 25 per cent counter-tariffs that can add a significant cost pressure on businesses. Some of them operate on very thin margins."

Gaudreault says owners can raise prices to cover the added costs, but doing so could make them less competitive. 

"So they're kind of stuck between a rock and a hard place."

Affected businesses can apply for financial support from Ottawa, but there are no guarantees they will get it. "The federal government will only consider [assistance] where it is required to address exceptional and compelling circumstances," the Deparment of Finance said in a statement. 

WATCH | Canada's counter-tariffs hurt small businesses, but many still support them:

Canada's counter-tariffs hurting small businesses, but most support them

3 days ago

Duration 1:56

Most small businesses approve of Canada's counter-tariffs according to a survey of members of the Canadian Federation of Independent Business, even as the costs of items like steel and sporting goods imported from the U.S. are increasing.

The CFIB poll also revealed something that surprised Gaudreault: Despite concerns over counter-tariffs, three-quarters of businesses surveyed said they support Canada's decision to impose them. 

"I think it comes from a sense that something needs to be done … not to just lie down there, and let's let the U.S. administration do whatever it is that they want," said Gaudreault. 

Although Cluck Clucks will now likely face higher costs each time it opens a new location, the restaurant is on the side of counter-tariffs.

"It is for the good of the entire country," said Hashim at a Cluck Clucks in Pickering. "As a citizen, as a naturalized citizen, we will bite the bullet for our adopted country." 

But back at the lacrosse store, Santos reveals that she's on the fence about the counter-tariffs, after learning that they will affect most goods sold in her store. 

"I want Canada to stand up for themselves and I'm a proud Canadian," she said.

"But on the other side of it, these increases in prices also hurt us."