For thousands of Canadian businesses, the next major shock in the trade war may be only days away. President Donald Trump’s administration is preparing to impose 50% tariffs on roughly US$20 billion worth of Canadian goods on August 19, reaching products that have continued to move tariff-free under CUSMA.
A new Canadian Federation of Independent Business study suggests the consequences could be severe. Among exporters selling products covered by the tariffs, 77% expect revenue losses and 35% believe their revenues could fall by at least half. The risk is particularly significant for smaller companies that built their businesses around easy access to the U.S. market and have few realistic alternatives that can replace American customers quickly.
A 50% Tariff Is Set to Hit on August 19
The Trump administration announced the new duties through three proclamations using Section 338 of the Tariff Act of 1930. Unlike earlier measures that left most CUSMA-compliant Canadian products protected, these tariffs are designed to apply even when affected goods satisfy the North American trade agreement’s rules. The U.S. Trade Representative estimates that nearly US$20 billion of Canadian imports are covered, equivalent to roughly 5.2% of the US$383 billion in goods the United States imported from Canada in 2025.
That percentage can make the measure look relatively contained at the national level, but it hides how concentrated the damage could become. The affected lists stretch across dairy products, alcoholic beverages, electronics, furniture, building materials, plastics, apparel, machinery, sporting goods and agricultural products. Wine, hockey sticks and cement are among the examples highlighted by the White House. Energy, potash, fish, critical minerals and goods already covered by certain Section 232 tariffs are excluded. For an individual company whose main product appears on the list, however, the national exemptions offer little comfort.
More Than One-Third of Exposed Exporters Fear Their Revenue Could Be Cut in Half
The clearest warning comes from a CFIB study conducted between July 28 and August 6. The organization collected responses from 1,833 owners of independent Canadian businesses across regions and industries. Among exporters to the United States, 40% reported selling at least one product that would be caught by the incoming 50% tariffs. Of those exposed exporters, 77% expect their businesses to lose revenue if the duties take effect.
The size of the anticipated losses is what makes the findings particularly striking. Thirty-five per cent of businesses with affected exports said their revenues could decline by at least 50%. Another 78% of exporters said the tariff would make their products uncompetitive in the U.S., while 75% said it would push them toward reducing their dependence on American customers. Yet businesses cannot necessarily change markets overnight. CFIB found that 78% of exporters remained in a wait-and-see position as the deadline approached, reflecting the difficulty of making major investment, staffing and supply-chain decisions while negotiations are still underway.
The Numbers Suggest Thousands of Canadian Companies Could Be at Serious Risk
Statistics Canada counted 47,948 Canadian enterprises exporting goods in 2025. The United States remains by far the most common destination. There were 41,171 Canadian enterprises exporting goods to the U.S. in 2024, and Statistics Canada reported that the number fell by another 542 in 2025. That puts the latest total at roughly 40,600 businesses. Small and medium-sized firms make up much of that exporter base rather than the landscape being dominated entirely by multinational corporations.
Applying the CFIB findings to the entire exporter population should be treated as an illustration rather than an official forecast, because CFIB surveyed its own membership. But the exercise demonstrates the potential scale. If roughly 40% of 40,600 U.S. exporters were exposed and 35% of that group experienced revenue declines of at least half, the implied number would approach 5,700 companies. The dependence is also deeply entrenched: Statistics Canada found that in 2024 the United States was the only foreign market served by 65.9% of Canadian goods exporters. For many businesses, therefore, losing U.S. orders does not mean simply redirecting a shipment elsewhere.
This Tariff Reaches Far Beyond Canada’s Biggest Industrial Names
Trade disputes between Canada and the United States often bring steel mills, aluminum smelters, automakers and oil producers to mind. The August 19 tariffs are different because the covered products reach much deeper into the small-business economy. The White House lists separate measures connected to dairy, alcohol and motor-vehicle-related grievances, but one of the product lists extends across a surprisingly wide collection of industries. It includes items such as telecommunications equipment, furniture, plywood, doors, cement, packaging, clothing, footwear, luggage, toys, sporting goods, machinery, cosmetics, flowers and seeds.
That creates an unusual vulnerability for companies that believed complying with CUSMA gave them a predictable route into the American market. Consider a Canadian manufacturer that has spent years building relationships with U.S. distributors, configuring packaging for American customers and organizing transportation around a nearby border crossing. A European or Asian market may theoretically offer another customer base, but reaching it requires new distributors, certifications, logistics and marketing. Geography itself has been a Canadian competitive advantage in the United States. A sudden 50% tariff can erase much of that advantage before a replacement market can be developed.
A 50% Tariff Does Not Mean Canada Simply Writes Washington a Cheque
There is an important distinction behind the alarming revenue projections. U.S. tariffs are collected from the American importer when goods enter the United States. A Canadian exporter does not automatically hand over 50% of its sales revenue to the U.S. government. Instead, the commercial damage occurs through negotiations between buyers and sellers. An American customer may accept some of the additional cost, demand a lower Canadian price, increase its own prices, reduce orders or find a supplier in another country.
Economic research from previous U.S. tariff rounds shows why the outcome can vary substantially. Studies of the 2018–2019 trade war found that American importers and consumers ultimately carried much of the tariff burden through higher prices. More recent research examining the 2025 tariff increases estimated pass-through to U.S. import prices at about 92%. That does not eliminate the threat to Canadian exporters. If an American distributor concludes that a Canadian product has become too expensive, even a tariff technically paid in the United States can translate into cancelled orders north of the border. The CFIB revenue warning is therefore primarily about collapsing sales and competitiveness, not a literal 50% deduction from every Canadian invoice.
Businesses Are Already Cutting Spending and Delaying Hiring
The economic effects can begin before a tariff is actually collected. Companies facing an uncertain order book tend to preserve cash, delay expansion and become cautious about adding workers. A separate Canadian small-business study cited by Global News found that 55% of respondents had already cut spending, while 25% had delayed hiring. Roughly one-quarter had raised consumer prices. More than six in 10 of the businesses surveyed reported at least some dependence on the United States, while 13% described the relationship as core to their operations.
Those decisions can spread beyond the exporter itself. A manufacturer receiving fewer American orders may purchase less packaging, transportation, advertising or professional services at home. The Bank of Canada has already incorporated trade disruption into its outlook. Its July Monetary Policy Report said Canadian exports remain on a lower trajectory than before U.S. tariffs were introduced and that business investment remains below the path it would otherwise have followed. The economy has shown signs of improvement, but another tariff shock concentrated among smaller exporters risks interrupting that adjustment just as some firms had begun regaining confidence.
Canada Is Trying to Diversify, but Replacing the U.S. Takes Time
Ottawa has made trade diversification one of its central economic objectives, with the federal government targeting a doubling of non-U.S. exports over the next decade and roughly $300 billion in additional trade. Programs are also available to businesses dealing with tariff disruption. Federal support includes the Regional Tariff Response Initiative for small and medium-sized enterprises, the Strategic Response Fund and financing programs aimed at companies affected by tariffs. CanExport SMEs continues to provide funding intended to help eligible businesses develop markets abroad.
There are signs that diversification is occurring. Statistics Canada reported that while the number of enterprises exporting to the United States fell in 2025, the number selling to non-U.S. destinations increased for the first time since 2019, including gains in Africa, the Middle East and Europe. Still, diversification is better understood as a long-term risk-management strategy than an emergency substitute for the American market. Canada shares a border, integrated transportation infrastructure and decades of supply-chain relationships with the world’s largest consumer economy. For a small company accustomed to delivering to Michigan or New York, building comparable business in Europe or Asia can take years rather than weeks.
The Next Seven Days Could Determine Whether the Damage Materializes
Canadian officials are still attempting to prevent the tariffs from taking effect. Trade Minister Dominic LeBlanc and Chief Trade Negotiator Janice Charette met U.S. Trade Representative Jamieson Greer on August 11, marking LeBlanc’s third round of meetings with U.S. trade officials in three weeks. Negotiations remain active as the August 19 deadline approaches, leaving open the possibility that the measures could be cancelled, reduced or altered before importers actually begin paying them.
Reuters has reported that Canada and the United States have also discussed a potential package of concessions. According to a source familiar with those negotiations, possible Canadian moves have included changes involving tariffs on U.S. automobiles, dairy quota administration and the return of American alcohol to provincial shelves, potentially in exchange for U.S. relief on tariffs affecting Canadian steel and aluminum. No final agreement has been announced. That leaves exporters facing an uncomfortable choice: restructure businesses now for tariffs that could still disappear, or wait and risk being unprepared if a 50% wall suddenly goes up. For companies that depend heavily on U.S. customers, August 19 is becoming less of a trade-policy date and more of a survival deadline.
