The US-Canada tariff war is heating up, and Canadian businesses are feeling the pressure.
In early 2025, the United States imposed steep tariffs on Canadian exports, targeting industries such as steel, aluminum, and electronics. Canada retaliated with its tariffs on U.S. imports, further escalating the trade conflict.
This trade dispute is not just about political posturing—it has real economic consequences. Canadian businesses now face rising costs, limited access to the U.S. market, and supply chain disruptions.
For digital businesses, the impact is less direct but still significant—higher operating costs, reduced customer spending power, and uncertainty in cross-border partnerships.
This is where strategic digital marketing and automation by business experts can provide a competitive edge.
Businesses must adjust quickly. Market diversification, automation, and strategic cost-cutting will be essential for maintaining profitability.
This guide explores practical strategies businesses can adopt to navigate the US-Canada tariff war and thrive despite growing economic pressures.
What Exactly Is The US-Canada Tariff Dispute?
In early 2025, the U.S. administration imposed a 25% tariff on all Canadian steel and aluminum imports and a 10% tariff on Canadian energy exports. The justification was to protect American industries and address trade imbalances.
However, Canada quickly responded by imposing 25% tariffs on a range of U.S. imports valued at $155 billion.
Key Facts About The Trade Conflict
| Issue | Details |
| Tariffs on Canadian Exports | 25% on steel and aluminum; 10% on energy exports |
| Canadian Retaliation | 25% tariffs on U.S. goods like food, apparel, electronics ($155 billion affected) |
| GDP Impact | Canada’s GDP growth could drop by 0.4% in 2025 (Bank of Canada) |
| Inflation Impact | Inflation could rise by 0.3% due to higher import costs (Bank of Canada) |
| Government Response | Financial relief, tax deferrals, and infrastructure improvements |
The industries most affected include manufacturing, automotive, agriculture, and retail. The cost of doing business in Canada is rising, and businesses are looking for solutions.
Challenges For Canadian Businesses
Rising Costs
Tariffs are increasing costs for raw materials, shipping, and production. For example, the price of steel imported from the U.S. has surged by up to 20%.
Small and medium-sized businesses that rely on U.S. materials are struggling to absorb these costs without raising prices.
Supply Chain Disruption
Automotive manufacturers and agricultural producers are particularly vulnerable. Cross-border supply chains are essential for industries like auto parts manufacturing, and tariffs are causing delays and higher transportation costs.
Reduced Access To U.S. Markets
Canada sends about 75% of its exports to the United States. The tariffs have made Canadian goods less competitive in the U.S. market, leading to a decline in sales for some industries.
Impact On Digital Businesses
Even though digital businesses don’t rely directly on physical goods, the ripple effects are significant. Higher inflation reduces customer spending power, which impacts digital ad performance and online sales.
Cross-border partnerships are also becoming more complicated due to the increased cost of doing business between the U.S. and Canada.
How Businesses Can Adapt To The US-Canada Tariff War
1. Diversify Supply Chains
Relying too heavily on U.S. imports or exports is now a risky strategy. Businesses should seek alternative suppliers in Europe and Asia to reduce dependence on the U.S. market.
For example, several Canadian manufacturers are already shifting their sourcing to South Korea and Germany to avoid tariff-related costs.
Key Tip: Focus on suppliers in countries that have trade agreements with Canada under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
2. Leverage Government Support Programs
The Canadian government has introduced several measures to help businesses weather the tariff storm:
- Tax Deferrals: Businesses can defer corporate income tax payments.
- Financial Assistance: The government has set aside $30 billion to support affected industries.
- Employment Insurance (EI) Support: Businesses experiencing revenue loss can qualify for EI-related benefits for workers.
3. Reassess Pricing Strategies
Higher costs due to tariffs mean businesses need to adjust their pricing models carefully. Raising prices across the board could drive away customers, but targeted adjustments can help maintain profit margins.
- Increase prices strategically on tariff-affected goods.
- Offer discounts on non-tariff-impacted products to maintain customer loyalty.
- Communicate transparently with customers about price increases.
4. Focus On Digital Marketing To Offset Losses
When physical supply chains face disruption, increasing focus on digital channels can help businesses stay competitive.
- Use AI-driven advertising to target specific customer segments more effectively.
- Automate customer engagement through email campaigns and social media.
- Adjust pricing and product offerings based on customer behaviour data.
5. Explore New Markets
Reducing reliance on the U.S. market will help businesses avoid future trade conflict risks. Canada has strong trade ties with the European Union (CETA) and Asia-Pacific nations (CPTPP).
- Explore new export opportunities in Germany, Japan, and South Korea.
- Expand into the growing markets of Southeast Asia and the Middle East.
6. Invest In Automation And Efficiency
Automation can help businesses reduce costs and improve productivity. Investing in AI, machine learning, and automated production lines can offset higher material costs.
- Automated supply chain management can reduce errors and improve delivery times.
- AI-based pricing models can help set competitive prices even in volatile markets.
7. Focus On Domestic Growth
Prime Minister Mark Carney’s plan to eliminate internal trade barriers by July 1, 2025 could create new opportunities within Canada.
- Businesses should focus on expanding into other provinces.
- Improved labour mobility and harmonized regulations will create a more favourable domestic business environment.
About Raja Mohsin Abbas
Raja Mohsin Abbas is a business expert specializing in automation and efficiency. He is the founder of Reach First, an international digital marketing agency.
Raja specializes in AI-driven marketing, helping businesses optimize customer engagement and increase profitability. He has consulted for companies across North America and Asia, guiding them through economic challenges with strategic insights.
Contact Raja Abbas for expert advice on business strategy and automation.
