Small businesses already hit by the latest U.S. tariffs and Canada’s counter-tariffs are now facing a third problem, an industry group says: Financial relief measures that miss the mark.
The aid announced Tuesday — along with $27.6 billion in Canadian counter-tariffs — includes up to $7.5 billion in funding.
But the bulk of that aid comes from regional development funds that would disqualify many small businesses, said Dan Kelly, CEO of the Canadian Federation of Independent Business.
“My guess is that at least half of small businesses won’t even be able to apply for any of the relief,” said Kelly, noting that the bulk of the funds will come through the Regional Tariff Response Initiative delivered via economic development agencies based across the country.
Most of those agencies, said Kelly, have different thresholds for businesses to qualify for the relief, with minimum standards for number of employees, amount of revenue, or both.
“I was disappointed. I’d hoped they’d at minimum remove the restrictions,” said Kelly. “There’s no evidence they changed the RTRI thresholds. The message, unfortunately, is that you’re only worthy of support if you have lots of employees or hundreds of thousands or millions per year in revenue.”
Problem with tariff relief is that the money is a loan
Another big problem, according to Kelly? The majority of the tariff relief comes in the form of loans. That, he added, isn’t an appealing prospect for businesses still digging out from under COVID-related debt, and an uncertain future thanks to tariffs.
“There’s no capacity for businesses facing 50 per cent tariffs to take on more debt,” said Kelly.
Trump’s latest 50 per tariff on a wide variety of Canadian goods, which went into effect at 12:01 a.m. Saturday, is focused mostly on items which affect goods manufactured or shipped by small businesses, Kelly said.
Still, Kelly struck something of an optimistic tone, noting that the federal government has acted with relative speed in building out tariff relief.
“I do get that it is very difficult for a government to get it right immediately. They’re not gonna get everything right for supports on Day 1, and … there was an openness to working with business to get it right.”
The government needs to make sure businesses which actually need the support will get it — and quickly — said a senior official with the Canadian Chamber of Commerce.
“How quickly they respond on remissions and with the right amount of precision will be critical,” said Matthew Holmes, head of government policy at the CCC.
While the federal government has said it’s aiming to be nimble and targeted, it remains to be seen, Holmes added.
“That’s the government’s commitment. In practice, we’ll be watching very carefully to see what happens,” Holmes said.
For businesses in the construction industry, Canada’s countermeasures will mean even higher costs at a time when they’re already facing the weight of U.S. tariffs, said the head of the Residential Construction Council of Ontario.
“There are things like appliances, drywall, concrete powder, structural steel, and electrical equipment on Canada’s list. Those will all increase building costs,” said RESCON president Richard Lyall, who estimated that Canada’s counter-tariffs could add $5,000 to $10,000 to the cost of building a house.
Trump tariffs adding thousands to house building costs
In comparison, Lyall said some estimates show that Trump’s tariffs — including his latest 50 per cent levy — have added anywhere from $15,000 to $25,000 to the cost of building a house in Canada. But that pinch won’t happen right away, he said, as builders have built up an inventory of supplies during a slow period for the industry.
“It’s going to take time for this to bite. The industry’s already slow,” said Lyall. “If we were going full out like we were a few years ago, it would be a bigger problem.”
Still, Lyall is optimistic that the trade war won’t keep escalating, and could cool off if the Democrat take control of the U.S. House of Representatives and Senate in the midterm elections this November.
