A small Ontario manufacturer has become an unusually clear example of how quickly a trade dispute can move from government policy into factory planning. Bowmanville-based aVenco Ltd., which converts parchment baking paper for the North American market, says roughly 30 to 40 per cent of its sales previously came from the United States. That business has now stalled under a new 50 per cent U.S. tariff.
The immediate problem goes beyond the tariff bill itself. President Kathleen Chapman says uncertainty has produced a “freeze reaction” among American customers, making buyers reluctant to discuss future business or commit to long-term contracts. While public reporting does not identify a formally cancelled bricks-and-mortar expansion project, the evidence points to something almost as consequential for a growing manufacturer: expansion discussions, customer commitments and the confidence needed to invest have been put on hold.
A U.S. Market Worth Up to 40% of Sales Has Suddenly Stalled
For aVenco, the United States was never a marginal export destination. Chapman says roughly 30 to 40 per cent of the company’s business had been tied to U.S. customers. Losing momentum in a market that large can alter everything from production scheduling and staffing to equipment purchases and financing decisions. A manufacturer expecting steady American orders can justify adding capacity because machines, workers and warehouse space have future revenue supporting them. When those orders become uncertain, the calculation changes quickly.
The damage is particularly striking because the company was built to participate in an integrated North American marketplace. Its Bowmanville operation converts parchment baking paper and supplies customers across the continent. The tariff therefore hits a business model developed around relatively frictionless cross-border sales. The risk is not necessarily that every dollar of American revenue disappears permanently. The more immediate problem is that a 30-to-40-per-cent exposure suddenly becomes revenue whose timing, margins and long-term reliability can no longer be assumed.
The New 50% Tariff Changes the Economics of an Everyday Product
Parchment paper hardly resembles the heavy industries normally associated with trade wars, yet aVenco demonstrates how broadly tariffs can reach. The company sources its raw parchment paper from France before preparing and converting it at its Ontario operation. Chapman says it was already dealing with U.S. trade measures affecting European goods before the latest escalation added a 50 per cent tariff to the Canadian-converted product entering the American market.
That creates an unusually difficult cost structure. A Canadian manufacturer can add labour, packaging, quality control and other value in Ontario, only to see the finished product arrive at the border carrying a tariff large enough to overwhelm normal commercial margins. A 50 per cent duty is not comparable with a routine freight increase or a few points of inflation. Unless the producer, importer, retailer or consumer absorbs that added cost, the Canadian product can quickly become commercially unattractive against alternatives not facing the same barrier.
Customer Uncertainty Can Freeze Investment Before Revenue Actually Disappears
The most important phrase Chapman used to describe the impact was a “freeze reaction.” American customers, she said, have become reluctant to advance discussions or sign long-term agreements because nobody knows where the trading relationship will settle. That distinction matters. A factory does not have to lose every existing customer before investment stops. Management only needs to lose confidence in the future order book.
Manufacturing expansion usually requires commitments made well before additional revenue arrives. Equipment may need to be purchased, workers recruited and trained, raw materials contracted and financing arranged months in advance. Long-term customer contracts make those decisions easier because they provide evidence that new capacity will actually be used. When potential customers hesitate, the business case weakens even if the factory floor remains busy today. In that sense, tariffs can suppress investment indirectly: uncertainty turns tomorrow’s potential sales into something too unreliable to finance today’s expansion.
The Tariff Shock Comes Just as aVenco Was Building Scale
The timing is notable because aVenco is a relatively young manufacturer rather than a century-old industrial giant. The company says it was founded in 2022 and operates from Bowmanville, where it converts parchment paper for the North American market. Its own corporate materials describe significant production capacity and an effort to compete through sustainable packaging, private-label manufacturing and Canadian conversion.
That growth trajectory makes access to a large neighbouring market particularly important. Smaller manufacturers frequently need scale to spread equipment, certification, labour and administrative costs across more units. The United States offers that scale without the shipping distances associated with Europe or Asia. For a company located in southern Ontario, American customers can therefore be integral to growth rather than simply an optional export channel. The tariff shock arrives at the stage when establishing recurring customers, filling available capacity and building larger retail relationships are especially important to the economics of the operation.
Canadian Shoppers Are Providing an Unexpected Counterweight
While American business has stalled, a remarkably different response has emerged at home. aVenco says it received only about 20 direct-to-consumer orders during the previous two years. In the week after the new U.S. tariffs took effect, direct orders jumped into the hundreds as Canadians sought out domestically made products. For a relatively small manufacturer, that is an extraordinary shift in buying behaviour over a matter of days.
The surge offers a human-scale picture of the Buy Canadian movement. Consumers who may never previously have known where their baking paper was converted are now actively searching for Canadian alternatives. Yet direct consumer demand does not automatically replace a large U.S. wholesale account. Selling hundreds of individual packages involves different logistics, marketing and fulfilment costs than supplying retailers or distributors by the pallet. The response nevertheless gives aVenco something valuable during the disruption: evidence that domestic demand exists if Canadian distribution channels can catch up.
Retailers May Be Moving More Slowly Than Consumers
Chapman says Canadian consumers appear to be moving faster than retailers. Shoppers are asking for domestic products and ordering directly, but manufacturers say obtaining additional shelf space through established retail chains takes longer. That gap matters because a national retailer can move volumes that direct web orders cannot easily replicate. A manufacturer losing major U.S. accounts needs more than patriotic enthusiasm; it needs purchasing departments willing to translate that enthusiasm into recurring wholesale orders.
This is one of the central challenges in replacing export demand with Canadian sales. Consumers can change preferences almost instantly, while retail planograms, contracts, distribution networks and purchasing cycles may be established months in advance. aVenco has responded by serving customers directly even though Chapman says the company was not really designed as a direct-to-consumer operation. The improvisation illustrates both the opportunity and the limitation of economic nationalism: shoppers can create a signal quickly, but domestic supply chains still need time to reorganize around it.
Ontario Is Especially Exposed When U.S. Buyers Pull Back
aVenco’s experience fits a much larger structural vulnerability in Ontario. Analysis by Ontario’s Financial Accountability Office found that manufacturing is the province’s economic sector most exposed to the United States, with about 40 per cent of manufacturing production exported there on average. Some industries are considerably more dependent: approximately 80 per cent of Ontario motor-vehicle production and 51 per cent of motor-vehicle-parts production were tied to U.S. exports in the period examined.
Those figures explain why seemingly narrow tariff decisions can reverberate across factory towns. Ontario’s industrial economy developed around decades of highly integrated cross-border production, short transportation routes and customers that treated the Canada-U.S. border as relatively predictable. Manufacturers did not build that system expecting every product to face a 50 per cent barrier. When market access changes abruptly, finding replacement customers is rarely instantaneous. A company may know how to manufacture competitively yet still struggle because the geography of its customer base has suddenly become a liability.
Smaller Manufacturers Have Less Room to Absorb a Trade Shock
The latest tariff escalation covers only a portion of total Canadian exports, but averages can obscure the impact on individual businesses. Reporting on the new measures estimated that roughly $28 billion in Canadian goods were affected. For the overall economy that represents a limited share of exports. For a manufacturer sending 30 or 40 per cent of its sales into the affected market, however, the exposure can be existentially important.
Smaller companies are particularly vulnerable because they generally have fewer markets, thinner financial cushions and less bargaining power with large customers. A multinational can sometimes shift production between countries, renegotiate sourcing or temporarily absorb lower margins. A modest Ontario plant has fewer levers. It cannot quickly reproduce years of customer relationships in another country. The result is an uneven trade shock: headline economic numbers may look manageable nationally while individual factories postpone hiring, equipment purchases or growth because a substantial portion of their expected revenue has become uncertain.
Government Support Can Help, but It Cannot Recreate Customers
Ontario has expanded programs intended to help tariff-affected companies diversify and invest. The Ontario Together Trade Fund, for example, specifically recognizes significant trade exposure, including revenue losses of 30 per cent or more, as an eligibility factor. The program is designed to support companies developing new markets, strengthening domestic supply chains and investing in manufacturing capacity. Provincial funding for the fund has been increased to $150 million over three years.
Those measures address a real problem, but financing and grants have limits. A government program can help pay for new equipment or assist a company entering another province, yet it cannot instantly replace an American customer ordering large volumes every month. The central challenge for businesses such as aVenco is commercial demand. If Canadian retailers expand their domestic sourcing, public support can help manufacturers respond with greater capacity. Without those purchase commitments, companies may remain reluctant to make large investments regardless of how attractive the financing becomes.
The Real Risk Is Where the Next Round of Investment Goes
The longer trade uncertainty persists, the more consequential the location question becomes. Canadian manufacturers do not simply decide whether to expand; they decide where expansion makes the most economic sense. Companies with substantial U.S. customer bases may eventually conclude that producing south of the border is the simplest way to reduce tariff exposure. Evidence from other Canadian manufacturers already shows the pressure: aluminum producers have described adding shifts at U.S. facilities while cutting activity in Canada because demand is being redirected across the border.
For aVenco, the immediate task is more basic—protecting a U.S. business that once represented roughly 30 to 40 per cent of sales while cultivating the unexpected surge of Canadian demand. But the broader lesson reaches well beyond parchment paper. Investment follows predictable customers and predictable rules. If the Canada-U.S. trading relationship remains unstable, the danger to Ontario is not merely today’s lost shipment. It is the factory line, warehouse expansion or hiring decision that quietly gets postponed—or eventually placed somewhere else.
