Question Period Note: Impacts of U.S trade disruptions on Canada's small businesses

What is the Government of Canada doing to support small and medium-sized businesses?

•Small and medium-sized businesses are key contributors to Canada’s international trade, representing 40% of the total value of Canada’s exported goods.
•Due to United States tariffs and other trade policy shifts, Canadian businesses are facing rising costs and sales disruptions.
•The Government of Canada is using every tool at its disposal to protect Canadian small and medium-sized businesses and help them stay competitive.
•Budget 2025 introduced a new Trade Diversification Strategy to increase Canada's global trade participation and provide Canadian businesses with a comprehensive suite of measures to expand internationally.

Canada and the U.S. have deeply integrated economies. Nearly 78% of goods exported by Canadian small and medium-sized enterprises (SMEs) go to the U.S.. However, recent U.S. trade policy changes have negatively affected Canadian SMEs.

U.S. trade policy changes
Tariffs
•March 4, 2025: U.S. imposed a 25% tariff on Canadian imports, 10% on energy/potash (under IEEPA border/fentanyl).increasing to 35% on August 1, 2025.

  •March 7, 2025: Goods qualifying under the Canada-United States-Mexico Agreement (CUSMA) exempted (under IEEPA border/fentanyl). 

  •March 12, 2025: Global 25% tariff on steel/aluminum implemented; rose to 50% by June 4, 2025, and broadened additional derivatives (under Section 232)

  •April 3, 2025: Canadian automobiles/light trucks face a 25% global tariff. 

  •May 3, 2025: 25% tariff on non-CUSMA  auto parts (under S.232)

  •August 1, 2025: Semi-finished copper products/derivatives face 50% global tariffs. (under S.232)

  •August 7, 2025: Tariff to 35% on non-CUSMA goods.

  •August 29, 2025: U.S. suspended De Minimis exemption eliminating duty-free treatment for shipments under $800. This disrupts Canadian SMEs relying on low-value cross-border delivery.

Federal Government Response
The government has introduced a range of tariff relief supports available to SMEs, including:
•Strategic Response Fund (ISED): $5 billion to support businesses impacted by trade disruption to diversify markets, strengthen domestic production, develop new value-added products, improve productivity and reinforce supply chains.

  •Canada’s regional development agencies (RDAs) new Regional Tariff Response Initiative: $1 billion over 3 years to support SMEs impacted by tariffs.

  •Business Development Bank of Canada (BDC) Pivot to Grow initiative: $500 million to provide loans to SMEs affected by tariffs.

  •BDC Softwood Lumber Guarantee Program: $1.2 billion to guarantee loans and lines of credit to the softwood lumber businesses impacted by tariffs.

  •Export Development Canada (EDC) Trade Impact Program: $5 billion to help businesses diversify away from U.S. markets. 

  •Farm Credit Canada (FCC) Trade Disruption Customer Support: $1 billion to provide financing for farmers impacted by tariffs. 
  •Global Affairs Canada (GAC): Information, tools, and support to help Canadian businesses navigate U.S. tariffs and export duty-free under CUSMA.

Budget 2025 introduced several measures under the Trade Diversification Strategy to increase and diversify Canada’s participation in global markets. Targeted SME supports include:
•SME Export Readiness Program (ISED): $46.5 million over four years for training SMEs with limited export experience.

  •CanExport (GAC): $68.5 million over four years to help SMEs and industry associations share costs for international business activities.

  •Innovation Partnership Program & Canadian Technology Accelerator (GAC): $7.6 million over four years and $2.1 million ongoing to help Canadian firms scale exports via partnerships and technology initiatives.

•Canada is engaged in ongoing negotiations with the United States (U.S.) and aims to reach a good deal that benefits Canada.
•The Government of Canada will continue to protect Canadian interests and prioritize the needs of the national economy.
•Improving affordability for small businesses and all Canadians is key to Canada’s economic success.
•Budget 2025 unveiled the Trade Diversification Strategy, which aims to double overseas exports within ten years and increase Canada’s trade by $300 billion. This initiative will support business growth in major competitive sectors and promote engagement with the world’s fastest-growing markets.
•To help entrepreneurs navigate economic uncertainty, the Business Development Bank of Canada (BDC) is delivering the $500 million Pivot to Grow initiative, providing Canadian businesses with working capital loans for up to $5 million.