Preparing for Tariffs

Tariffs, trade wars, and uncertain trade relations—these terms have been making news headlines recently, and they can leave any small business owner wondering how they might be affected. If the USA introduces tariffs, it will be likely that Canada responds by introducing tariffs as well. But don’t worry, you’re not alone in navigating these changes. Here’s how you can prepare for both scenarios. Let’s start with the basics: what exactly are tariffs, and how do they affect Alberta’s small businesses?

What Are Tariffs?

A tariff is essentially a tax on goods that are imported or exported across borders. When a product is imported into Canada from another country, a tariff can be imposed to make that product more expensive. An example would be if Canada imposes a 10% tax on imported bicycles from the U.S., it will make them more expensive for Canadian retailers and consumers to sell. Similarly, if Canada exports goods to another country and that country (the USA, for example) imposes a tariff, it can make Canadian products more expensive in foreign markets. This tax can vary based on the type of good, where it’s coming from, and trade agreements between countries.

Tariffs are often used by governments to protect local industries from foreign competition by making imported goods more expensive. In the case of trade wars or rising tensions between countries, tariffs are commonly raised or introduced as a form of pressure or retaliation. While they can help domestic industries, tariffs tend to make goods more expensive for businesses and consumers alike.

How Tariffs Affect Small Businesses in Alberta

For small businesses in Alberta, especially those relying on imported goods or exports, tariffs can have a significant impact. Here’s how:

Export Challenges: If your business exports products to the U.S.A. or other countries, tariffs could make your goods more expensive in foreign markets, reducing your competitiveness.

Increased Costs: On the flip side, if your business imports materials, products, or equipment from the U.S.A., tariffs can raise the cost of these goods. This means that your profit margins could shrink, as you may have to absorb these costs or pass them on to your customers.

Supply Chain Disruptions: Tariffs can lead to delays in shipping and a more unpredictable supply chain. Businesses that rely on timely imports may find themselves facing shortages, which could affect their ability to fulfill orders on time.

Price Fluctuations: For businesses that rely on goods subject to tariffs, there can be fluctuations in the price of raw materials or products. These unpredictable price changes can make it harder for small businesses to plan their budgets and manage cash flow effectively.

In essence, tariffs create an extra layer of complexity for small businesses, particularly those that trade internationally themselves, or that supply or support businesses/industries that trade internationally. But by taking some proactive steps, you can help your business become more resilient in the face of these changes. For an easy way to navigate Canadian tariffs, check out the Government of Canada’s Canada Tariff Finder. It helps businesses find the right tariff classification for their products.

Why Supporting Local Matters More Than Ever

With rising trade tensions, relying on local suppliers is one of the smartest moves you can make. When you source from local vendors, you’re building a more dependable supply chain that’s less vulnerable to global shifts.

Supporting local keeps your business agile—if your suppliers are closer to home, it’s easier to manage price changes, avoid disruptions, and maintain your stock levels. Plus, by choosing local, you’re strengthening Alberta and Canada’s economy and supporting businesses that are likely less affected by the uncertainties of international trade.

Choosing Canadian Suppliers

How do you make sure you’re buying Canadian-made products and materials? In a world full of imports, it can be tricky to tell. First, look for labels like ‘Made in Canada’ or ‘Product of Canada.’ Under the Consumer Packaging and Labelling Act, the ‘Product of Canada’ label means that at least 98% of the total direct costs of producing the item were incurred in Canada. Essentially, this means the product was made in Canada by Canadians, with only negligible imported elements.

On the other hand, ‘Made in Canada’ indicates that at least 51% but less than 98% of the direct costs were incurred in Canada. If a company uses a maple leaf or Canadian flag on a product without clear explanation, it will be held to the “Made in Canada” standard. If you’re still unsure, ask your suppliers about where their goods are sourced. You might be surprised by how many products—especially in the retail and manufacturing sectors—can be sourced right here in Alberta.

Marketing Your Canadian Business

Marketing your products as “Made in Canada” or “Product of Canada” is essential because it taps into the growing consumer preference for supporting local businesses. A poll by the Canadian Federation of Independent Business showed 86% of Canadians prefer buying Canadian-made products, so in a market where sustainability and local support are increasingly valued, showcasing your Canadian roots can differentiate your brand and give you a competitive edge.

However, if your product has Canadian elements but doesn’t meet the threshold for “Product of Canada” or “Made in Canada,” the Competition Bureau recommends using more specific terms like “Assembled in Canada with foreign parts.” For groceries, the Canadian Food Inspection Agency allows for other acceptable labels, for example “Roasted and blended in Canada” for coffee, “Packaged in Canada” for jam made elsewhere, “Refined in Canada” for sugar. These labels ensure transparency and help businesses remain compliant with regulations while still highlighting their Canadian connection.

However, it’s important to follow the rules carefully. Violating the guidelines for using “Made in Canada” or “Product of Canada” labels can have serious consequences. Under the Competition Act, a corporation can be fined up to $10 million for a first offence and $15 million for any subsequent offence.

To further emphasize your Canadian products and help customers identify authentic local goods, consider uploading your items to Buy Beaver, a community-driven platform designed to highlight truly Canadian products.

Diversifying Your Business and Suppliers

Relying on one supplier or one market? It’s time to rethink that strategy. When tariffs strike, businesses that rely on a single supplier or market can face significant setbacks. Diversifying your suppliers is one of the best ways to protect your business from this kind of risk. If you’re currently relying on U.S. suppliers, consider switching to Canadian-based companies, or expand your supplier network to include different regions within Canada.

Focusing on Domestic Markets

Diversification isn’t limited to suppliers—it can also mean diversifying your product lines or target markets. If you’ve been exporting to the U.S., now might be the time to double down on local opportunities. Expanding your reach within Alberta or Canada can help balance out the effects of international trade changes, ensuring you have multiple streams of revenue to fall back on. Diversifying helps keep your options open when the global trade landscape gets complicated.

While tariffs may be an uncertainty, Alberta’s small businesses don’t have to face it unprepared. By supporting local suppliers, diversifying your business, and focusing on domestic markets, you can build resilience into your company’s operations. Need help navigating this shifting landscape? Book a free consultation with a Business Link Strategist today. Together, we can ensure that your small business is ready for whatever comes next.