Canadian businesses prefer adjustments over layoffs due to tariffs

Small and medium business leaders in Canada are preparing for the impact of U.S. tariffs on their operations. A recent poll shows they prefer making minor changes, like reducing hours or freezing hiring, rather than laying off employees immediately. However, they believe these short-term fixes may only last six to twelve months. The survey, which included 50 business leaders, highlighted concerns about potential job losses if the tariffs remain in place. U.S. President Donald Trump imposed a 25 percent tariff on many Canadian goods on March 4, with a temporary pause for those compliant with the United States-Mexico-Canada Agreement until April 2. The report, from World Trade Centre Toronto, stated that businesses with high fixed costs may have to make bigger workforce adjustments sooner. The effects of tariffs are expected to vary depending on the number of U.S.-dependent businesses in each region. On average, Canadian small and medium businesses get over 31 percent of their revenue from U.S. sales. Some businesses face a greater risk, with 18 percent relying on the U.S. for more than three-quarters of their revenue. For them, the tariffs pose a serious threat to their survival. Moreover, 63 percent of surveyed businesses expect to cut or delay investments in research and development due to revenue losses from tariffs. This trend could weaken their competitiveness in the future. To help address these challenges, the report suggests policymakers focus on diversifying trade, improving diplomatic relations, and providing support for innovation. Businesses are encouraged to explore new market opportunities and improve their operational efficiency.