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Tariff Support for Local Businesses

By now we have all heard the word “tariffs” being thrown around by politicians and the media but not everyone totally understands them. What are tariffs and how do they work? How do tariffs affect businesses in the region and what resources are available to help? In this article we answer any questions you may have as well as provide a list of helpful resources for businesses of all sizes and industries.

What Are Tariffs?

A big question you hear frequently asked is what exactly are tariffs? Simply put, a tariff is a tax that the government of a country imposes on imported goods and services. The company importing the goods or services is the ones who pay the tariff to the customs authority of the country imposing them. These costs however are typically passed on to the consumers in the form of higher prices.

Governments impose tariffs for a wide range of reasons including:

  • Revenue Generation: Like any tax, a tariff can be a source of income for the government.
  • Help Protect Domestic Industries: When imported goods are more expensive consumers are encouraged to buy domestically produced alternatives which can in turn help local industries to grow and compete.
  • Address Trade Imbalances: Tariffs can be imposed to reduce a trade deficit, which is when a country is importing more than it exports.
  • Political Tool: Tariffs can also be used as a form of pressure in political or diplomatic negotiations.

Additionally, there are different types of tariffs such as:

  • Specific Tariff: A fixed duty applied per unit, weight, or quantity of imported goods, regardless of their total value.
    • Example: A country might impose a per-barrel tariff on imported oil.
  • Ad Valorem Tariff: A duty calculated as a percentage of the total value of the imported goods.
    • Example: A 10% tariff on a $30,000 imported car would add $3000 to its price.
  • Compound Tariffs: A combination of both specific and ad valorem tariffs.

How Do American Tariffs Affect Businesses In The Corridor?

American tariffs negatively impact businesses not only in the Corridor but across Canada. This impact is felt in numerous ways including:

  • Reduced Competitiveness: Tariffs on Canadian exports act as a tax making Canadian products more expensive for American importers. This cost is more often than not passed on to consumers in the form of higher prices. As a result of these increases, Canadian goods become less competitive in the U.S. market, leading to potential decreases in sales and revenue for Canadian businesses.
  • Supply Chain Disruptions: Canadian businesses, particularly those located in regions near the border such as the Corridor, rely on a secure supply chain with the United States. Goods and materials can sometimes cross the border multiple times during the manufacturing process leading to increased production costs and potential delays.
  • Trade Diversification: As a result of the tariff’s impacts, some businesses may attempt to diversify by looking for new markets outside of the United States. This process however can be long and challenging particularly for businesses in the Corridor that rely on long-standing relationships with their nearby American neighbours.

What Resources Are Available To Help Businesses?

Support Programs/Organizations

  • Export Development Canada Trade Impact Program
    • The EDC Trade Impact Program will facilitate an additional $5 billion over two years in support for eligible companies across a range of products to help you navigate economic challenges.
  • Business Development Bank of Canada Loan Program
    • BDC helps Canadian businesses manage tariffs and trade volatility through flexible financing options such as the “Pivot to Grow” loan. Additionally the BDC provides tailored advisory services, customized repayment schedules, strategic guidance and more.
  • Farm Credit Canada Financing Program
    • To support the Canadian agriculture and food industry as tariffs are implemented, FCC is providing $1 billion in new lending to help alleviate financial challenges.
  • Ontario Together Trade Fund
    • OTTF provides financial support in the form of a grant or loan up to a maximum of $5 million. This investment aims to serve more interprovincial customers and develop new markets.
  • CANEXPORT SME Funding
    • Eligible small and medium-sized enterprises (SMEs) can get up to $50,000 to cover 50% of the costs of exporting products or services to countries where you have little or no sales.
  • Remission of Tariffs
    • In some select circumstances, the Canadian government will allow a business relief from paying tariffs on goods from the United States in certain circumstances.
  • Tax Deferment for Ontario Businesses
    • The government of Ontario has launched a program to defer select provincially administered taxes until October 1, 2025 in addition to issuing a $2 billion rebate for safe employers through the WSIB.
  • EI Work Sharing Program
    • This program provides Employment Insurance benefits to eligible employees who agree to reduce their normal working hours, and share the available work while their employer recovers.
  • MEDJCT Trade Programs
    • The Ministry of Economic Development, Job Creation and Trade offers programs/services for Ontario businesses looking to expand or diversify their exports.
  • MEDJCT Export Advisor Service
    • Arrange a free, confidential one-on-one consultation with an export advisor whether you’re new to exporting or simply looking to expand to new markets.

Find New Partners, Customers and Suppliers

  • Trillium Network GIS Map Tool
    • Get access to information for thousands of manufacturing establishments and ecosystem partners in Ontario, depicted on an interactive map

Information and Explainers

  • Canada Tariff Finder
    • Get tariff information for specific products and countries where Canada has a trade agreement.
  • Tariff Impact Tracker
    • Find key economic indicators on employment, business activity, consumer spending, and investment
  • Trade Map
    • Trade Map provides – in the form of tables, graphs and maps – indicators on export performance, international demand, alternative markets and competitive markets, as well as a directory of importing and exporting companies.
  • Tariff Toolkit
    • The Startup Canada Tariff Toolkit is designed to aid entrepreneurs and support organizations in navigating the complexities of tariffs and their impact on Canadian businesses.

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