Tariff threats are freezing big business and leaving small companies with no options
Regardless of size, confusion and fear of financial chaos is halting many business moves in Canada
Millions of dollars and thousands of jobs are in flux for Canadian businesses, as constant changes to tariffs mean companies based in this country are either avoiding financial decisions or feel they are unable to make them.
From large multinationals to small outfits with less than a dozen employees, the repetitive cry of "uncertainty" is causing more than just confusion. It's influencing financial decisions for big players, and freezing smaller companies in their tracks.
For Kun Shoulder Rest, it's the latter. The company is globally known for the violin and viola ergonomic accessories it makes in, and exports from, Ottawa.
"If you don't play the violin, you will never have heard of a shoulder rest. If you do play the violin, you will know our brand," said Juliana Farha, one of the company's directors.
But despite its international profile, the company does not have the resources to simply pivot to new markets when faced with on-again, off-again tariffs on products sold in the United States.
"It's our biggest market and that represents 35 to 40 per cent of our global market," said Farha, who explained that the company relies on students, amateurs and younger violinists and violists to buy its product . A shoulder rest is typically bought once and kept for years, if not decades.
Small businesses cannot easily pivot
Essentially, the company cannot pivot every time tariff policies change to try and replace potential American customers. There aren't exactly millions of extra violinists in the rest of the world, and Kun has already expanded into international markets such as Europe.
"The feeling of recklessness of all of this has created tension and uncertainty for us," according to Farha, who is also concerned that some international competitors won't be facing the same tariffs as her Canadian company, making its products seem even less competitive.
In a scenario like this, business and economic experts say businesses may need to bite the bullet and either hope their customers will accept a higher price, or lose money themselves.
"Companies either have to say, 'We want to maintain our customer base, therefore we are going to absorb that additional cost,' or pass it on to their actual customers," said Charmaine Goddeeris, director of customs and international trade with consulting firm BDO Canada.
Goddeeris points out that many companies may need to determine whether they want to keep doing business in the United States at all.
"If yes, then you're going to have to come to the United States so you can solidify [being] made in America," she said, since such products ostensibly would not face tariffs when sold there.
That's not a decision a small business can make easily — or at all — without having to completely relocate. Not so much for larger companies, which may have the financial ability to split production between countries.
Big companies holding off investment
But larger corporations that could afford to spend the money are frozen these days, too.
With tariff policies constantly changing — in some cases on both sides of the border — many large businesses are just waiting until the dust settles to invest their cash.
KP Tissue manages and owns part of Kruger, Canada's largest toilet paper and tissue manufacturer. The company announced in a recent earnings call that it would be delaying construction of a new tissue plant.
It currently operates facilities in both Canada and the United States, and it was unclear what country the new plant would be in.
In a statement emailed to CBC News, a Kruger representative said when the company originally announced looking into a new plant in early December, it had believed it could announce the results of that evaluation in early 2025.
But now, it says things are too questionable.
"The current business uncertainty will require us to complete additional due diligence prior to making an official announcement," wrote François Paroyan, general counsel for Kruger.
In the earnings call, KP Tissue's CEO blamed more than the Trump tariffs for all the uncertainty ahead, citing reciprocal tariffs from Canada, a drop in the Canadian dollar, and a possible recession as factors in freezing its actions.
The company also didn't provide profit estimates for the next few months for the same reasons. It did estimate that between $600 million and $700 million of its revenue is "exposed" to tariffs in some way.
'Have to keep your iPhone nearby'
Algoma Steel is in a similar position. The Canadian manufacturer employs thousands who face unpredictable announcements on when general tariffs might be applied or lifted, along with specific steel tariffs that could directly impact its business.
"You have to keep your iPhone nearby. And, you know, as soon as I get off this interview, I'll check the news ticker to see what might have changed," said Michael Garcia, CEO of the Sault Ste. Marie, Ont.-based company.
During Garcia's interview with CBC News, U.S. President Donald Trump announced what seemed like a temporary suspension of some tariffs. At the time, it was unclear whether that would apply to steel, or whether the global steel-specific tariffs that Trump had announced in early February would still apply.
It was a perfect example of what is making business decisions potentially worth hundreds of millions of dollars impossible.
"I don't know what that delay means other than we could be here in less than a month, kind of going through the same motions. Is there going to be a tariff? Oh my, there's a tariff. Now what are we going to do?" said Garcia.
One thing he can point out definitively is that the company is avoiding spending money where it can.
"We are placing a very high focus on preserving our cash and reducing as much discretionary spending as possible," said Garcia.
For now, this uncertainty means fewer investments, period, from a large business in Canada.
Big or small, businesses are struggling: economist
It's a pattern the chief economist of the Canadian Federation of Independent Business is seeing first-hand in feedback from his organization's members.
"Because there are so many decisions that are being overturned or changed, businesses have a hard time actually adjusting," said Simon Gaudreault.
With fear and uncertainty all over the Canadian economy right now, business optimism is low, he said.
That translates into frozen hiring and pauses on investment, he said, and businesses may avoid developing new markets until they know more clearly what's going to happen.
And that may not be in the cards just yet.
"There is just so much, so much fog right now."
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With files from CBC's Laura MacNaughton
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