The U.S.-Canada trade relationship has seen new twists and turns in recent months, and it continues to evolve. While headlines earlier this year warned of steep tariffs on Canadian exports—up to 25% on a broad range of goods and 10% on energy—these measures were paused for 30 days following Canada’s adoption of additional border protections. According to a BBC report (“Canada leaders take push against tariffs to White House,” published 8 days ago), Canada’s provincial and territorial premiers recently visited Washington, D.C. to urge U.S. officials to reconsider the potential tariffs. Although discussions were described as “constructive,” there remains the possibility of further action once the temporary pause ends.
In other words, this is very much an ongoing situation—not old or settled news. Even as the immediate threat is on hold, Canadian business owners (and those looking to expand cross-border) should remain vigilant. Below, we discuss the bigger picture of U.S.-Canada trade tensions, highlight key developments, and explore how small and midsize businesses (SMEs) can brace themselves for potential policy shifts.
The growing politicization of trade
Trade has always been shaped by political agendas, but the intensity of recent debates has brought a new level of unpredictability. Political leaders in both Washington and Ottawa have used tariffs or the threat of tariffs to influence negotiations, playing to their domestic bases and national interests.
- Tariffs as leverage. As seen in current discussions, U.S. leaders threatened to impose sweeping duties on Canadian goods, then paused them—illustrating how tariffs can serve as a high-stakes bargaining tool.
- Public sentiment. Media reports and political statements often highlight support for “tough on trade” stances, ratcheting up pressure to enact—or at least threaten—protectionist measures.
For SMEs, the lesson is straightforward: anticipate sudden changes. Political climates can shift quickly, creating new tariffs or rolling back existing ones with minimal notice. Maintaining flexible contracts, pricing strategies, and supply chains can help small businesses weather these policy swings.
The shift toward regionalization
While globalization remains a dominant force, there is renewed focus on strengthening domestic and regional networks in an effort to reduce over-reliance on distant suppliers or volatile foreign markets.
- Realigning supply chains. Companies increasingly weigh the benefits of sourcing regionally for greater reliability, even if it means higher costs.
- Heightened scrutiny of imports. Tariffs or regulatory checks can be seen as protective measures—justified politically as ways to safeguard home industries, particularly in sectors like steel, aluminum, and energy.
For small businesses, scaling back international suppliers in favor of regional ones can mitigate sudden tariff hikes. However, the decision must balance factors like cost, availability, and the risk of future policy changes.
Recent developments: tariffs paused—but risk remains
A key element distinguishing the current situation from past U.S.-Canada trade disputes is the short-term pause on sweeping tariffs. Earlier in the year, President Donald Trump threatened:
- 25% tariffs on all Canadian imports
- 10% duties on Canadian energy exports
After Canada introduced heightened border measures—particularly around the flow of fentanyl—Washington agreed to a 30-day moratorium. However, these tariffs could stack with additional levies if the White House moves forward with a proposed 25% tax on steel and aluminum imports by mid-March.
Meeting at the White House
All 13 of Canada’s provincial and territorial premiers traveled to Washington, D.C. for talks aimed at preventing a renewed trade standoff. The BBC reported that White House advisers encouraged Canadian officials to take President Trump “at his word” regarding concerns over national security and fair trade practices.
- Border security. U.S. policymakers often cite security—especially around drugs and immigration—as rationale for tariffs or other restrictive measures.
- Cross-border integration. Canadian leaders emphasized that both economies are heavily interlinked and stressed that tariffs would not just harm Canada but also disrupt U.S. industries and consumers.
For now, the official pause buys both sides time to negotiate. But the possibility of tariffs remains real—and small businesses in particular should stay alert as deadlines approach.
The rise of non-tariff barriers
Beyond the large-scale tariff threats, non-tariff barriers (NTBs) such as enhanced safety inspections, labeling requirements, and licensing rules can also hinder seamless cross-border commerce. These rules often change rapidly in periods of heightened trade tension.
- Regulatory disparities. Even if tariffs are kept at bay, differences in health, safety, or environmental regulations between Canadian provinces and U.S. states can lead to shipment delays or extra compliance costs.
- Documentation overload. When trade disputes loom, authorities may increase inspection rates at borders. SMEs without ample administrative resources can find these processes especially burdensome.
A proactive approach—like subscribing to government updates and consulting trade specialists—helps minimize the risk and avoid last-minute scrambling.
The future of U.S.-Canada trade relations
Predicting the precise trajectory of U.S.-Canada relations is difficult, especially given the fluid political environment. Yet a few broad themes stand out:
- Short-term relief, long-term uncertainty. With tariffs on pause for 30 days, businesses have a temporary reprieve. But they should prepare for a re-escalation if negotiations stall or domestic political pressure in either country intensifies.
- High-stakes diplomacy. Both sides clearly recognize the interconnectedness of their economies; still, tensions are high. Negotiators face a balancing act between domestic political demands and maintaining critical trade flows.
- Evolving leadership and legislation. Shifts in leadership (in Congress or Parliament) or newly passed legislation could quickly alter trade policies. Sectors once deemed “safe” from tariffs can suddenly face scrutiny if they become politically salient.
Overall, the U.S.-Canada relationship may experience more ups and downs in the near future. For SMEs, the best course is to stay engaged and adapt quickly, rather than waiting on the sidelines for permanent solutions.
Building resilience for small businesses
Despite the uncertainties, small and midsize businesses can take practical steps to safeguard operations and preserve growth.
Revisit cross-border contracts
Even if you have well-established partnerships, now is the time to ensure your agreements address potential duties or fees.
- Tariff escalation clauses. Specify who bears the cost if new tariffs are implemented mid-contract. Clear language can avert disputes when unexpected levies arise.
- Force majeure provisions. Although often associated with natural disasters, force majeure clauses can be extended to major regulatory or governmental actions that impede contract performance.
Diversify supply chains
Relying solely on one supplier or distribution channel can backfire in volatile times.
- Multiple partnerships. Cultivating relationships with secondary and tertiary suppliers in different regions can reduce disruptions if one source faces steep tariffs or border holdups.
- Nearshoring. Locating some production or assembly closer to home might lessen transport costs and regulatory headaches—though it’s important to weigh the potential for future policy shifts in the same region.
Stay informed with reputable sources
Policy changes can surface abruptly, making it crucial to keep tabs on both official and journalistic updates.
- Government announcements. Bookmark and subscribe to relevant federal and provincial agencies—both in Canada and the U.S.—for early heads-up on trade negotiations and new regulations.
- Mainstream media. Outlets like The Globe and Mail, The Guardian, The New York Times, and the BBC have established networks of analysts who track developments closely.
Seek expert advice
Trade disputes and shifting regulations can create confusion around customs compliance, contractual obligations, and liability risks. Consulting with professionals—from trade consultants to legal advisors—can help clarify your obligations and best options.
If you need small business legal support to navigate cross-border uncertainties, don’t hesitate to reach out to qualified experts with experience in U.S.-Canada trade.
Pulling it all together
While the immediate threat of large-scale tariffs has been paused, the underlying tensions between the U.S. and Canada are far from settled. Recent visits by Canadian provincial leaders to Washington, D.C. highlight the critical importance of diplomacy and timely negotiations. For small and midsize businesses, the lesson is clear: stay flexible, stay informed, and stay proactive.
No one can predict exactly how the next round of talks will unfold. But by reinforcing contracts to address potential tariff surges, diversifying supply chains to minimize disruptions, and keeping a close eye on policy announcements from reputable sources, you can bolster your resilience against the next wave of trade changes. Preparedness is the key to turning uncertainty into an opportunity for strategic growth—even when the headlines are changing by the day.
Author Bio: (It can be authored to our firm or to Christopher Stienburg)
Roberts Obradovic Law
Roberts Obradovic Law is a Toronto-based firm dedicated to helping small and midsize businesses navigate the evolving challenges of cross-border trade. With a strong focus on practical legal counsel for tariffs, regulatory compliance, and contractual risk management, we empower SMEs to safeguard their interests and seize new growth opportunities—no matter how quickly the trade landscape shifts.
Christopher Stienburg
Christopher Stienburg is a Toronto-based civil litigation lawyer with firsthand experience advising on cross-border transactions. As founder of Stienburg Law and an associated lawyer at Roberts Obradovic Law, he helps entrepreneurs adapt to the evolving U.S.-Canada trade landscape, ensuring businesses stay proactive amid shifting tariffs and regulations.
The post The shifting U.S.-Canada trade landscape: how small businesses can prepare and thrive first appeared on CanadianSME Small Business Magazine.