Navigating the Trade War: How Small Businesses in the North Can Build Resilience
By Amanda Esposti
April 1st, 2025
Trade wars and tariffs have become an unfortunate reality in today's global economy, and small businesses in the North are feeling the pressure. As international trade policies shift and retaliatory tariffs are imposed, many entrepreneurs are seeing increased costs, supply chain
disruptions, and shrinking profit margins. While these challenges can be daunting, small and medium-sized enterprises (SMEs) can take strategic steps to ensure resilience and long-term success.
The Impact of the Trade War on Northern Small Businesses
For many small businesses, particularly those reliant on imported goods or exports, tariffs can be a major financial burden. Industries such as manufacturing, agriculture, and retail are among the hardest hit, as the cost of raw materials and finished products rises. In turn, these
added costs often trickle down to consumers, potentially leading to decreased demand and slower sales.
Supply chain disruptions further compound the problem. Many northern businesses source materials or products from international markets, and when tariffs increase, these goods become more expensive or even harder to obtain. This has forced some companies to seek alternative suppliers, renegotiate contracts, or even reconsider their product offerings entirely.
Additionally, shifting trade policies create uncertainty. Businesses planning to expand into international markets may hesitate to make long-term investments due to the unpredictability of tariffs and potential retaliatory measures from other countries. This hesitation can stifle growth and innovation, particularly for SMEs that lack the financial cushion of larger corporations.
Strategies for Resilience in the Face of Tariffs
Despite these challenges, small businesses can take proactive steps to mitigate the impact of trade wars and build resilience. Here's how:
1. Diversify Supply Chains
Rather than relying on a single international supplier, businesses should explore multiple sources — both domestic and international. Sourcing locally where possible can reduce tariff- related expenses and improve supply chain stability. Partnering with regional manufacturers or wholesalers can also provide more control over pricing and delivery timelines.
- A northern furniture manufacturer can shift from using imported wood to sourcing from regional
- A clothing retailer can partner with Canadian textile producers instead of overseas factories to reduce tariff costs and ensure stability.
- A restaurant can source produce from a local farmers market, or
- This might also be a good time for companies to research if they can accomplish internal manufacturing of their products.
- Example: A local tea or coffee business can explore purchasing a roaster and doing inhouse
2. Explore Alternative Markets
If exporting to certain countries has become cost-prohibitive due to tariffs, businesses should consider new markets with more favorable trade conditions. Conducting market research to
identify emerging opportunities and leveraging trade agreements that provide preferential treatment can help maintain international sales momentum.
- A small agricultural producer exporting to the S. can look to European or Asian markets that have more favorable trade agreements.
- A craft brewery impacted by aluminum tariffs can seek partnerships with domestic manufacturers or switch to glass packaging.
- A software company experiencing restrictions can pivot to regions with growing tech adoption, sch as Southeast Asia.
- An auto parts supplier affected by steel tariffs can expand into Canadian markets with strong local manufacturing incentives.
- A dairy producer impacted by export quotas can redirect sales to countries with high dairy import needs, such as China.
- A renewable energy company facing subsidy reductions in one country, can look to nations investing heavily in green technology, like Australia.
3. Adapt Pricing Strategies
Businesses facing increased costs due to tariffs should reassess their pricing models. Instead of passing the entire cost increase to customers, companies can explore value-added services, bundle deals, or gradual price adjustments to maintain competitiveness while preserving margins.
- A manufacturing company can implement tiered pricing where bulk purchases offer greater savings, encouraging larger orders.
- A specialty food store can introduce premium pricing for locally sourced products, emphasizing their quality and sustainability to justify the cost.
- Adding a "Made in Canada" stamp to your products can reassure customers that they are supporting the Canadian Additionally, many consumers look for the “Product of Canada” designation because they have more confidence in locally grown produce,
particularly with respect to quality control and safety. However, be sure to comply with the regulations and guidelines set by the Canadian Food Inspection Agency (CFIA) to determine if you meet the standards for the appropriate label.
Types of labels can include:
Product of Canada
- This label means that all or nearly all (at least 98%) of the product's ingredients, processing, and labor come from Canada.
*Example: A bottle of maple syrup made from 100% Canadian maple sap and processed in Canada.
Made in Canada
- This label means the product was manufactured or processed in Canada, but some ingredients may be A qualifying statement is often required (e.g., "Made in Canada from domestic and imported ingredients").
*Example: A frozen meal processed in Canada using both Canadian and imported vegetables.
Prepared in Canada
- Like "Made in Canada," this term is often used for processed foods that are
assembled, cooked, or mixed in Canada. It also requires a qualifying statement about the origin of ingredients.
*Example: A can of soup mixed and cooked in Canada using a mix of local and imported ingredients.
4. Invest in Technology and Automation
Efficiency is key to offsetting rising costs. Implementing automation, digital tools, and AI-driven inventory management can help streamline operations and reduce costs. Technologies that optimize logistics and production processes can also provide a competitive edge.
- A logistics company can adopt AI-based route optimization to cut fuel costs and delivery
- A northern manufacturer can invest in robotic assembly lines to reduce dependency on costly imported components.
- A construction company can use 3D printing for prefabricated materials, cutting down on raw material waste.
- A warehouse operator can deploy autonomous forklifts and robotic sorting systems to enhance
- A healthcare provider can implement digital patient record systems and AI-assisted diagnostics to improve workflow and reduce administrative overhead.
- A packaging company can switch to smart production lines that adjust in real time to reduce material waste and increase output.
- A dairy farm can install automated milking machines to increase
5. Advocate for Policy Changes
Small business owners should stay informed on trade policies and engage with industry
associations, local governments, and policymakers. By voicing concerns and participating in advocacy efforts, SMEs can influence policies that support fair trade and economic growth.
- A farming cooperative can join trade organizations to lobby for tariff relief on agricultural
- A local chamber of commerce like our Thunder Bay Chamber, can work with policymakers to secure economic incentives for businesses affected by trade
Stay Informed
Constant monitoring of regional trade developments and financial conditions is critical. Keep an eye on your business's cash flow, budget forecasts, inventory levels, vendor contracts, and outstanding accounts to ensure your business is agile and can react quickly to changes in the market.
For tips on managing your finances, check out my blog on financial management for startups:
https://www.nwoinnovation.ca/financial-management-for-startups
Canadian Government Programs for SMEs to Combat Tariffs
To assist businesses navigating the impacts of tariffs, the Canadian government has introduced several support programs:
- Financial Aid Package (March 2025):
- Launching the Trade Impact Program through Export Development Canada- The program will deploy $5 billion for exporters: Helps businesses diversify into new international markets and manage losses, lack of access to cash flow, and barriers to expansion.
- Financing through Farm Credit Canada-$1 billion for agriculture & food industries: Supports the agricultural and food sectors in reducing financial barriers.
- Business Development Bank of Canada-$500 million in low-interest loans: Assists businesses in managing cash flow and operational Businesses will also benefit from advisory services in areas such as financial management and market diversification.
- Enhanced Employment Insurance Work-Sharing Program: Allows reduced work hours while receiving job insurance, helping employers retain
- Remission Process (February 2025):
- Provides businesses with relief or refunds on retaliatory
- Eligibility includes inability to source goods domestically or from non-U.S. sources and exceptional circumstances where tariffs would have a severe impact on the
In addition, they have introduced the following measures to help Canadian workers and businesses affected by tariffs:
- Temporarily waiving the one-week employment insurance (EI) waiting period.
- Suspending rules around separation for a six-month period, so workers don't have to exhaust severance pay before collecting EI.
- Making it easier to access EI by increasing regional unemployment rate percentages.
- Deferring corporate income tax payments and GST/HST remittances from April 2 to June 30, 2025, providing up to $40 billion in liquidity to businesses.
- Providing more funding to Canada's regional development agencies, so they can better support businesses.
For more information and regular updates, please visit the Thunder Bay Chamber of Commerce tariff resources page: Visit our Tariff Resources & Updates Page
The Road Ahead
While trade wars create uncertainty, they also present an opportunity for businesses to reassess and strengthen their operations. By taking a proactive approach, diversifying supply chains, exploring new markets, optimizing costs, and leveraging technology, northern small businesses can not only weather the storm but emerge stronger and more adaptable in an evolving global economy.
Resilience is key, and those who embrace change will be best positioned for long-term success, no matter what trade policies come next.
For more information on funding programs available to support your business during these challenging times, visit our website. https://www.nwoinnovation.ca/get-funding
Disclaimer: The views and opinions shared in this blog are those of the individual author and do not necessarily represent the organization's perspective.