When US-Canada trade negotiations collapsed abruptly over the weekend, triggering reciprocal 50% tariffs from both nations, small and medium-sized business owners across the border woke up to an uncertain future that could wipe out major portions of their revenue overnight. For many enterprises already weathering years of on-again off-again trade tensions, the new levies mark a breaking point that threatens long-standing operations.
Cindy Baldassi, the Calgary, Alberta-based founder of handcrafted stone-and-glass jewelry brand CindyLouWho2, relies on US consumers for 75% of her total annual sales. Her product line, which features artisanal pieces crafted from amethyst, natural sea glass, and polished agates, will almost all fall under the new tariffs imposed by US President Donald Trump that went into effect Saturday. To avoid taking a total loss on each sale, Baldassi says she has no choice but to pass the full 50% tariff cost on to US buyers. The result, she warns, will almost certainly erase the vast majority of her American customer base. “It’s quite likely that it will wipe out most of my US sales,” Baldassi told the BBC. “I expect that at least half of my business will be gone.”
The tariffs target roughly $20 billion worth of annual Canadian exports to the US, equal to approximately 5% of Canada’s total annual shipments to its southern neighbor. The new levies build on existing tariffs already in place on Canadian steel, aluminum, automobiles and lumber. Canadian Prime Minister Mark Carney has pledged to match the US tariffs dollar-for-dollar, with 50% levies on US steel, dairy, home appliances and electronics set to take effect September 8. Trump’s new tariffs already target Canadian goods including wine, dairy, cement, clothing and hockey equipment.
For Canada, which sends 70% of all its exports to the US, the risk of escalating tariff pressure leaves the national economy heavily exposed. But many Canadian businesses have already navigated years of trade volatility, and the new round of levies has amplified long-running anxieties. Lind Furniture, a nearly 60-year-old leather furniture manufacturer based in Ontario, saw sales dip immediately after Trump took office in 2025, as trade uncertainty led major retail clients to pause big purchases. “As soon as there were tariffs in the air, people put purchases on hold,” said Michael Saifer, the company’s general manager. Today, Saifer says he doubts Canadian businesses can emerge unscathed from an all-out trade conflict. “Everyone wants to sell to the Americans – they can buy from whoever they want,” he said. “I don’t know that we’re going to win a war with them; we may get killed.”
Small Canadian apparel brands are already grappling with pre-ordered shipments that will arrive at US retailers just as the new tariffs kick in. Matteo Sgaramella, founder of Toronto-based menswear label Outclass, explains that most retailers place wholesale orders months in advance of delivery. The US store orders his company secured back in January are scheduled to arrive in September – meaning they will be hit by the full 50% tariff at the border. If Sgaramella alerts clients that they will be hit with an extra 50% charge on top of the agreed purchase price, he says almost all will cancel the order entirely. He has yet to figure out how to absorb or redistribute the unexpected extra cost, and warns the sudden shock will put countless small operations out of business. “Big business can always find a way… but small businesses are going to get smashed by this,” Sgaramella said. While only 20% of Outclass’ total sales come from the US market, other smaller enterprises that rely far more heavily on American customers face far bleaker outlooks.
The pain of reciprocal tariffs is not limited to Canadian businesses. On the US side of the border, companies that source goods from Canada or count Canadian customers as a core part of their revenue are already bracing for major losses. Paloma Clothing, a 51-year-old apparel and gift retailer based in Portland, Oregon, sources its best-selling product – custom-designed pillows printed by a Montreal firm – from Canada. Under the new tariffs, owner Kim Osgood says a standard markup would push the retail price of the $59 pillows up to between $86 and $90. Because gift items are extremely price-sensitive, co-owner Mike Roach says customers are unlikely to pay the higher price. The couple plans to hold the line on the original retail price, absorbing the extra cost themselves in hopes the trade dispute is resolved quickly. “It would be one thing if we had three months’ notice; that would be something you could plan around, do some work with the vendors,” Roach said. “But when it happens literally overnight you’re really stuck.”
Some US businesses have already been dealing with trade fallout for more than a year. Bill Easton, owner of Terre Rouge Wines in Plymouth, California, has been blocked from shipping his products to Canadian consumers for 18 months amid a widespread boycott of American alcohol in response to earlier tariffs. He currently pays $2,400 per month to store thousands of bottles of wine in a warehouse, holding out hope that he will one day be able to access the Canadian market he built over decades. Even if the border opens tomorrow, Easton says he cannot pass the 18 months of accumulated storage costs on to Canadian customers, leaving him with thousands of dollars in unrecoverable losses.
Border-region US retailers that rely on cross-border Canadian shoppers have also seen steady declines in revenue. Heather Seevers, owner of Northwest Yarns and Mercantile, a craft store located just 25 minutes from the US-Canada border in Bellingham, Washington, has seen the number of Canadian customers drop by roughly 20% since the latest trade war began more than a year ago. Tensions have been amplified by Trump’s public comments suggesting Canada should become the 51st US state, which sparked backlash among northern customers. Seevers says her shop has received multiple emails from Canadian shoppers saying they cannot patronize her business due to the anti-Canada political rhetoric. The combination of fewer customers and higher supply costs has already forced the store to launch a community fundraiser to stay open. With the new 50% tariffs, Seevers says the outlook will only get darker. “It’s going to get worse before it gets better,” she said. “It’s going to take years and years and years to get a relationship back with Canada, and I think these new tariffs are digging us deeper into a hole.”