For a Montreal consumer-products company, the Canada–U.S. trade fight has stopped being an abstract dispute measured in billions of dollars. It has become a decision about where soap gets made.
The Unscented Company has stopped contracting soap production to a manufacturer in Vermont and is shifting that work back to Canada as founder and CEO Anie Rouleau confronts rising tariff-related expenses. Rouleau estimates the current tariff environment could cost her business about $150,000 by the end of 2026. The move is relatively small beside the enormous volumes of goods crossing the border each year, but it captures a much larger shift: Canadian businesses are reconsidering supply chains built during decades when crossing the U.S. border was usually the easiest option.
A $150,000 Tariff Bill Changed the Calculation
The Unscented Company is a Montreal-based maker of fragrance-free home and body-care products, and its relationship with its Vermont manufacturer was not apparently failing on quality or service. Rouleau described the American producer in positive terms when explaining the decision to Global News. The problem was increasingly financial and strategic. She said calculations showed the current round of tariffs could cost her company approximately $150,000 by the end of 2026. For a smaller consumer-goods business, that is large enough to change sourcing decisions that might otherwise have remained untouched. Instead of continuing to outsource soap manufacturing south of the border, the company decided to bring that production into Canada and increase its commitment to domestic suppliers.
There is an important distinction behind that figure. The $150,000 was reported as Rouleau’s estimate of tariff costs facing the company overall, rather than a $150,000 tariff specifically attached to the Vermont soap contract. The direct border problem for American-made soap also involves Canadian retaliation. Canada’s consolidated tariff schedule continues to list several categories of U.S.-origin soap and skin-washing preparations under 25 per cent counter-tariffs introduced during the trade confrontation. In other words, Washington’s tariff campaign has created a cycle in which Canadian retaliation can make products manufactured in the United States more expensive for Canadian companies to bring home. For The Unscented Company, avoiding that cross-border exposure has become increasingly valuable.
Vermont Lost the Work Even Though the Business Relationship Was Good
One of the more striking elements of the decision is that it was not presented as a conventional supplier dispute. Rouleau told Global News that she valued the Vermont manufacturer and considered the company a strong partner. Yet a supply arrangement that made commercial sense in an integrated North American market began carrying a disadvantage simply because the finished product crossed an international border. That is precisely the type of disruption tariffs can create: purchasing decisions begin to depend not only on price, quality and manufacturing capability, but also on the nationality of the plant performing the work. A supplier can therefore lose business without becoming less productive or less competitive on its own terms.
That matters particularly in Vermont because Canada is not a marginal customer for the state. U.S. Trade Representative data show Vermont exported about US$2.1 billion worth of goods worldwide in 2025, with approximately US$635 million going to Canada. That represented roughly 31 per cent of Vermont’s goods exports and made Canada its largest foreign market. Small and medium-sized businesses are also central to the state’s export economy: 887 of the 1,023 Vermont companies recorded as exporters in 2024 had fewer than 500 employees. The Unscented Company contract is only one commercial relationship, but it illustrates how a prolonged trade conflict can gradually remove pieces from a deeply connected regional economy.
The Company Was Already 80% Made in Canada
Moving soap production north does not amount to building a Canadian supply chain from scratch. The Unscented Company says roughly 80 per cent of its products already undergo their main manufacturing in Canada. Its own sourcing information describes a network that includes Canadian product development, packaging, manufacturing, printing and transportation partners. At the same time, the company acknowledges that some specialized products and ingredients have historically required international suppliers. That mixed model is common in modern manufacturing: a bottle may be designed and filled in Quebec while ingredients, packaging components or specialized finished goods come from several different countries.
The tariff dispute is now pushing the company further toward the domestic side of that balance. Rouleau has said ingredients are still sourced globally, including from the United States, but that the business is committing to more local sourcing. This is significant because replacing a supplier is not necessarily the cheapest immediate option. Rouleau acknowledged that producing in Canada can initially cost more until sufficient manufacturing volume develops. She nevertheless said she was prepared to delay profitability in exchange for building more production capacity at home. The decision therefore reflects more than an attempt to avoid a particular customs charge; it represents a willingness to trade some near-term efficiency for greater control over future supply.
Reshoring Can Cost More Before It Saves Money
The appeal of bringing production home sounds straightforward until a business begins looking for replacement factories, materials and specialized expertise. Decades of continental integration under NAFTA and later CUSMA encouraged companies to concentrate different stages of production wherever they could be performed most efficiently. Saibal Ray, chair of supply chain management at McGill University, told Global News that this specialization means Canada has not developed domestic capacity in every activity because it previously did not need to. Small and medium-sized firms face the sharpest constraint because few have enough scale to manufacture every input themselves. Domestic production can therefore require investment, new supplier development and potentially higher unit costs.
The Bank of Canada has observed the same adjustment more broadly. Its analysis of how Canadian businesses are responding to U.S. tariffs found companies looking for new export markets and non-U.S. suppliers, while warning that these changes are costly at the beginning and take time. By the second quarter of 2026, some businesses told the central bank they had changed production, shipping or customs arrangements to reduce tariff exposure. The Unscented Company fits that pattern closely. Rather than waiting to see whether each tariff disappears, it is altering where production occurs. That may sacrifice some efficiency today, but it also reduces the amount of its business model that depends on uninterrupted tariff-free access to an American supplier.
Other Canadian Companies Are Rewriting Their Supplier Lists
The Unscented Company is far from the only Canadian business reassessing U.S. sourcing. Chapman’s Ice Cream, the family-owned manufacturer based in Markdale, Ontario, has been pursuing a much broader supplier shift. The company said in August that it was on track to replace more than 70 per cent of the American ingredients and components it uses with Canadian or non-U.S. alternatives by mid-2027. Chapman’s also said it had worked with Canadian companies to bring production of certain components into Canada that had not previously been manufactured domestically. Despite the transition, the company has pledged not to increase its prices before March 2028.
Those moves help explain why the trade conflict may have effects that persist beyond individual tariff announcements. Suppliers are being researched, tested and replaced while domestic producers are being asked to develop capabilities they previously lacked. Statistics Canada has already measured a broader shift in trade patterns. The United States received 71.7 per cent of Canadian merchandise exports in 2025, down from 75.9 per cent in 2024, while its share of Canadian merchandise imports declined from 62.3 per cent to 58.8 per cent. Meanwhile, Canadian exports to countries other than the United States increased 17.2 per cent in 2025. The U.S. remains overwhelmingly important, but companies are clearly testing alternatives.
The Trade War Is Disrupting Both Sides of the Border
The economic consequences are not confined to Canadian companies paying higher costs. When a Canadian buyer removes production from Vermont, the American manufacturer loses revenue as well. That is particularly notable in a state whose economy has unusually close links with Canada. U.S. government data show that Canada remained Vermont’s largest export market in 2025. Vermont exported roughly US$635 million in goods north of the border, more than twice the value sold to its second-largest market, Taiwan. Manufactured goods dominate the state’s exports, making stable cross-border industrial relationships especially important.
The interconnectedness runs deeper than exports alone. Vermont officials have highlighted Canadian investment, tourism and regional manufacturing partnerships as major parts of the state economy. An August 2026 update from Vermont’s economic-development community said more than 60 Canadian-owned companies employed roughly 2,600 Vermonters and put annual bilateral Vermont–Canada trade at approximately US$3.8 billion. Against numbers that large, one soap contract is not economically decisive. Its importance is symbolic. Tariffs intended to strengthen domestic production in one country can also encourage customers in the other country to eliminate American suppliers from their production chain, leaving firms on both sides searching for replacements.
The Latest Tariff Escalation Gives Companies Little Reason to Stand Still
The environment became even more uncertain in August. The Trump administration moved ahead with additional 50 per cent duties on specified Canadian products under Section 338 of the Tariff Act of 1930, with the measures taking effect on August 22 after a brief three-day delay. Ottawa subsequently announced that it would match the new U.S. measures dollar for dollar, with another package of Canadian counter-tariffs covering $27.6 billion in U.S. imports scheduled to take effect September 8. The Canadian rates range from 15 to 50 per cent and target industries including steel, dairy, appliances, agricultural equipment, pulp and paper, plastics and electronics.
The Unscented Company therefore made its Vermont decision against a backdrop in which businesses cannot easily assume that today’s tariff rules will still govern next year’s purchases. The Bank of Canada has repeatedly identified U.S. tariffs and trade-policy uncertainty as forces weighing on Canadian investment, exports and business planning. Its second-quarter 2026 business research found that roughly one-fifth of firms were still reporting cost pressure related to tariffs and trade policy. Rouleau’s response is unusually tangible: instead of building another tariff assumption into a spreadsheet, she moved production. For Canadian and American suppliers alike, that may be the most consequential phase of the trade fight—the point when temporary political measures begin changing permanent commercial relationships.
