For many Canadian companies, the trade conflict with the United States has moved well beyond political rhetoric and into everyday balance sheets. Statistics Canada found that 18.1% of businesses expected U.S. tariffs on Canadian goods to have a high impact on their operations when the tariff confrontation intensified in 2025. Subsequent data have shown that the pressure did not simply disappear as companies adjusted.
By the third quarter of 2026, nearly one-third of Canadian businesses expected U.S. tariffs to have a negative impact during the next 12 months. Manufacturers, transportation companies and wholesalers remained especially exposed. The financial consequences are appearing in several places at once: thinner margins, higher operating costs, price increases, postponed investment and efforts to find customers or suppliers outside the United States.
The One-in-Five Figure Captures the Most Serious Impact
The headline number comes from Statistics Canada’s Canadian Survey on Business Conditions for the second quarter of 2025. At that point, 18.1% of businesses across the country said U.S. tariffs on imports from Canada were expected to have a high impact on their operations. Another 16.4% expected a medium impact and 17.5% anticipated a low impact. Only 27.9% expected no impact at all, while 20.1% remained uncertain. That distinction matters: roughly one in five represented businesses expecting the strongest level of disruption, not the complete population of companies experiencing some form of tariff pressure.
Exposure also varied dramatically by industry. Transportation and warehousing had the largest share reporting an expected high impact, at 40.4%, followed by manufacturing at 38.5% and agriculture, forestry, fishing and hunting at 34.7%. Those industries often depend heavily on physical goods crossing the border, making tariffs more immediately visible than they might be for a domestic professional-services company. A Canadian manufacturer selling components to an American factory, for example, can face a difficult choice when a tariff suddenly changes the economics of an established contract: absorb part of the additional cost, negotiate a higher price or risk losing the customer. More recent figures show that the concern has persisted. In the third quarter of 2026, 32.2% of businesses expected U.S. tariffs to have a negative impact during the coming year.
Exporters and Manufacturers Are Carrying Much Heavier Exposure
The national average hides how concentrated the financial damage can become among businesses that actually sell into the American market. Statistics Canada reported that businesses exporting goods or services to the United States made an average of 36.6% of their total sales to American customers in its fourth-quarter 2025 findings. Among those exporters, 35.4% expected U.S. tariffs to have a major negative impact. More than two-fifths, 41.2%, anticipated declining profitability over the next three months, while 40.1% expected operating expenses to increase. Nearly one-quarter expected sales to fall.
That exposure remains especially visible in manufacturing. By the third quarter of 2026, 49.7% of manufacturing businesses expected U.S. tariffs to negatively affect them over the next 12 months. Transportation and warehousing was close behind at 47.3%, followed by wholesale trade at 45.1%. These industries sit directly inside the networks that move materials, parts and finished goods between Canada and the United States. A factory does not need to export an entire finished product to feel the pressure. A specialized component may cross the border before becoming part of another product, while packaging, metals, machinery or replacement parts may arrive from American suppliers. When tariffs alter costs at several stages of that chain, even a business with apparently healthy sales can see margins squeezed. That helps explain why tariff exposure can become a profitability problem long before a company reaches the point of shutting production or laying off workers.
Tariff Costs Are Showing Up in Both Prices and Profit Margins
Businesses ultimately have only a limited number of places to put an additional cost. They can absorb it and accept a smaller margin, try to negotiate with suppliers, cut spending elsewhere or charge customers more. Canadian companies are already using a mixture of those approaches. Statistics Canada reported that 27.4% of businesses had passed tariff-related cost increases to customers during the 12 months preceding its third-quarter 2026 findings. Another 30.4% said they were very or somewhat likely to pass tariff costs along during the next 12 months.
The likelihood can be considerably higher among companies directly involved in American trade. In Statistics Canada’s fourth-quarter 2025 analysis, 50.7% of businesses exporting to the United States said they were very or somewhat likely to pass tariff-related cost increases to customers. The figure reached 84.5% among U.S.-exporting retailers, 82.7% among wholesalers and 71.5% among transportation and warehousing businesses. Those numbers illustrate why tariffs can spread well beyond the company whose shipment actually encounters the border charge. A wholesaler paying more for goods may increase its price to a retailer; the retailer may then pass part of that increase to the final customer. Alternatively, companies with little pricing power may absorb the extra expense instead. Either outcome creates financial pressure—through higher consumer prices in one case or weaker business margins in the other.
Companies Are Reworking Supply Chains and Postponing Investment
Tariffs are also changing decisions that may shape businesses long after an individual shipment clears customs. During the second quarter of 2025, 12.2% of Canadian businesses said they had sought alternative suppliers outside the United States in response to tariff risks, while 12% had increased domestic sourcing. Another 7.5% delayed major investments or expenditures. The response was considerably stronger among exporters: 24.6% had sought customers outside the United States and 18.1% had postponed major investments or spending. Among manufacturers exporting to the U.S., 82.5% had taken some form of action to mitigate tariff risks.
The Bank of Canada has since identified a broader shift in trade patterns. It reported in January 2026 that Canadian businesses had increasingly looked for markets and suppliers outside the United States, while U.S. imports had fallen and imports from other countries had risen. About 80% of the decline in the U.S. share of Canadian imports occurred in sectors affected by Canadian counter-tariffs, although part of that shift later reversed as most earlier countermeasures were removed. The adjustment is not cost-free. A manufacturer that has spent years qualifying an American supplier cannot always replace it overnight. New components may require testing, contracts must be renegotiated and transportation routes can change. Delayed investment creates another concern because equipment purchases, plant expansions and technology upgrades are often what allow a business to improve productivity. Tariff uncertainty can therefore affect not only current profits but decisions about future capacity.
Small Exporters Are Facing an Even Sharper Viability Test
The latest tariff escalation has added another layer of pressure. In 2026, the Trump administration used Section 338 of the Tariff Act of 1930 to impose additional 50% duties on specified Canadian products. Canada subsequently announced matching counter-tariffs at rates of 15%, 25% and 50% on $27.6 billion worth of targeted U.S. imports, effective September 8. For companies caught directly between those measures, the issue can become one of cash flow and survival rather than simply lower profitability. Small firms often have less ability than multinational companies to spread tariff costs across numerous markets, suppliers and product lines.
Research released by the Canadian Federation of Independent Business in September offers a stark illustration. Among its members responding to a special trade-war questionnaire, 46% of exporters to the United States said their products were affected by the new U.S. Section 338 tariffs, while 49% of importers said they were affected by Canadian retaliatory tariffs. Affected businesses reported median monthly costs of $65,000. Most strikingly, 18% of affected exporters said their companies would cease to be financially viable if the trade conflict continued for three months or longer; the comparable figure among affected importers was 12% in CFIB’s detailed findings. The organization’s preliminary results came from 1,545 independent-business owners, so they should not be read as a census of every Canadian company. Still, alongside Statistics Canada’s broader data, they show why the tariff conflict is increasingly being measured not only in trade flows but in margins, investment decisions and the ability of some businesses to keep operating.
