Donald Trump has returned to the presidency, and a trade war of tariffs has actually broken out on March 4th. The Trump administration has imposed a 25% tariff on imports from Canada and Mexico, and an additional 10% tariff on imports from China. This brings the total tariff on Chinese products to 45%, which has a major impact on the export business of Canadian companies. I would like to share with you my thoughts on Canada.
Impact on Canadian small businesses
For example, the company I work for relies on the US country wise email marketing list market for about 30% of its sales, so the new tariff policy is a serious problem. In particular, for companies whose business model involves purchasing products from China and exporting them to the US, rising costs are unavoidable. This has raised concerns about raising product prices and reducing profit margins.
Manufacturing in China has been a cost-saving measure for many Canadian companies, but the application of the 45% tariff in the U.S. has significantly reduced the benefits of this.
You may be able to find them in Japan if you look hard enough, but I feel it’s difficult to find a manufacturer as easily as it is on Alibaba.
The US de minimis rule
However, some relief remains for e-commerce (EC) businesses: the U.S. ”
By utilizing this rule,
- If you ship products under $800 from there’s a huge industry of agencies Canada directly to the US, there are no customs duties.
- If you ship a large quantity of goods worth more than $800 at one time (e.g. bulk exports to retail stores), customs duties will be applied.
This rule will be particularly beneficial for small and medium-sized businesses that use the D2C model. However, this rule may be subject to change in the future, so it is necessary to continue to monitor the trade policies of the Trump administration.
Alternative strategies for Canadian companies
To mitigate the impact of the tariffs, Canadian small businesses are urged to consider alternative strategies, including:
Final assembly in Canada
If final assembly is done in Canada, it may be recognized as “Made in Canada” and in some cases avoid the high tariffs imposed on Chinese products. It’s not a perfect solution, but it can help reduce the cost of exporting to the U.S.
Shifting production to the US
Manufacturing in the US is more expensive, but it avoids tariffs entirely and allows for smoother trade, which may be a viable option for companies that are heavily dependent on the US market.
Expanding into new markets
The American market is certainly attractive, but it is also important to consider expanding into other trade zones such as Europe in order to diversify risks. The EU market in particular has a free trade agreement (CETA) with Canada, and has the advantage of being less susceptible to tariffs. My company has recently expanded into the UK, and we are considering expanding into Europe in the future.
Leveraging the “Made in Canada” brand
Currently, an increasing number of companies south africa business directory across Canada are adopting the “Proudly Canadian” label. Although there is no official national campaign, local efforts are gaining momentum, with supermarkets and other stores putting up labels and encouraging the purchase of Canadian products.
Trade policy has direct implications for business and daily life
I have been in the IT industry for a long time, so I have not been very aware of the impact of trade wars.
As the Trump administration continues to pursue tough trade policies, Canadian companies need to be flexible and adopt appropriate strategies. The American market remains attractive, but for long-term success, it will be important to explore new avenues, and those of us involved in product development, like myself, need to think about our supply chains, including the possibility of manufacturing outside of China.