Close-up of 'Shop Canadian' poster displayed in a local storefront in Edmonton, Alberta, Canada, on April 4, 2025. Artur Widak | Nurphoto | Getty Images

In the wake of escalating trade tensions between the United States and Canada, small businesses across the Canadian landscape are feeling the pinch of new tariffs imposed by the Trump administration. President Trump has asserted that his sweeping tariffs are designed to rebalance international trade, effectively bringing manufacturing jobs back to American soil. However, for their Canadian neighbors, the implementation of these tariffs has become more than just a matter of economics; it represents a significant erosion of trust that has historically underpinned the trade relationship between the two nations.

In 2024 alone, trade between the U.S. and Canada reached an impressive total of $762.1 billion. The statistics reveal that Canada relies heavily on its southern neighbor, exporting over three-quarters of its goods to the United States, while nearly half of all goods imported into Canada originate from there. However, starting in March of this year, the Trump administration introduced a hefty 10% tariff on Canadian energy exports and a staggering 25% tariff on numerous other imports from both Canada and Mexico. This tariff regime was a campaign promise that Trump made on his Inauguration Day, although he did exempt a number of imports outlined under the United States-Mexico-Canada Agreement (USMCA).

Alongside these tariffs, another 25% levy on vehicles not assembled in the U.S. came into effect earlier this month, impacting both Mexico and Canada, which are key players in the North American auto industry. An additional 25% tariff on auto parts is also set to take effect in the coming weeks. In response to these economic measures, Canada has begun to implement its own retaliatory tariffs, but a sense of national pride is leading some businesses to adopt alternative strategies.

For instance, Balzac's Coffee Roasters, a beloved chain of cafes across Ontario and Toronto, has taken a stand against the tariffs by rebranding one of its menu items. The Americano, a widely known espresso drink, has been renamed to "Canadiano," proudly featuring a maple leaf symbol. Similarly, Your Independent Grocers, part of the Canadian-traded Loblaw Companies, has introduced its own maple leaf logo to showcase products that are prepared in Canada while marking tariff-impacted items with a designated T logo both in physical stores and online.

Corinne Pohlmann, the executive vice president of advocacy at the Canadian Federation of Independent Business (CFIB), which represents over 100,000 small businesses across Canadas provinces and territories, pointed out that approximately half of their members are directly involved in importing or exporting goods from the U.S. In a survey conducted in December 2024, it was revealed that more than a quarter of CFIB members noted a significant increase in demand for Canadian-produced products, while over 50% expressed doubts about the reliability of the U.S. as a trading partner.

These trade tensions have begun to strain long-established relationships between U.S. and Canadian small businesses, resulting in tough decisions about which side of the border will absorb the costs associated with the new tariffs. Pohlmann recounted instances where CFIB members sought advice on renegotiating contracts with their American partners, highlighting the emotional toll these tariffs are taking. For many Canadians, this feels like a betrayal, she remarked.

Adding to the complexities, the Liquor Control Board of Ontario (LCBO) made a significant move by halting all purchases of U.S.-made products as of March 4. Signage at an LCBO retail store in Niagara-on-the-Lake announced, For the good of Ontario, for the good of Canada, explaining the reduction of U.S.-made offerings, including popular items like California wines and Tito's Vodka. In a clarification to CNBC, an LCBO representative stated that any product produced within Canada, such as local Coors Light beer, remains available on the shelves, despite the company's ownership being American. Molson Coors, which owns the brand, operates production facilities in both Canada and the U.S., adhering to a business model that often sees products manufactured in the local markets they serve.

Historically, tariffs have served as tools of "hard power," often prompting significant geopolitical shifts through coercive measures. The long-standing trade relationships that the U.S. has nurtured with partners like Canada, Mexico, and Japan have bolstered its influence globally. However, beyond the raw trade numbers, the intangible aspect of U.S. influence, often referred to as "soft power," stands to suffer under the current administration's policies. Former Secretary of State Antony Blinken expressed concerns about this decline, noting in an interview with CNBC's Andrew Ross Sorkin, The idea that we would not only see China attempt to enhance its soft power, but that we would willingly cede our own is detrimental to our national interests.