On the U.S.-Canada 'Trade War'

As the United States and Canada engage in tit-for-tat escalation, small businesses continue to bear the brunt of unpredictable, costly trade policy. The latest victims are small businesses importing products on the Section 338 list from Canada, including those claiming USMCA that have been largely exempted to date. Research from Trade Partnership Worldwide shows Section 338 tariffs could affect over 10% of U.S. imports from Canada for states such as Vermont.  

While we typically focus on U.S. import tariff costs, the story doesn’t end there. Companies don’t import OR export, many do both. In our recent small business survey, 42% of respondents reported that they also export. In fact, more than 1 in 4 survey respondents reported exporting to Canada specifically. 

This puts a real squeeze on small businesses from two sides. They are paying higher tariffs for their imported goods or materials while facing skeptical customers — or outright retaliation — in foreign markets. In the words of one small business that responded to the survey: “My company is an exporter that depends on a low-tariff regime. The U.S. administration's policies are a threat to the stability of relationships with my export customers.”

Whether importing, exporting, or both, the pain of lost business will be felt most acutely by small firms.