US-Canada trade war further taxes small businesses as costs rise during the Iran war
The latest U.S.–Canada tariff exchange is squeezing small businesses on both sides of the border, adding up to 50% duties on key products. Coupled with soaring energy prices from the Iran conflict, owners report lost sales, higher input costs and uncertainty about future demand.
The United States and Canada have entered a fresh round of tariff battles that are taking a heavy toll on small‑scale enterprises. After President Donald Trump slapped U.S. import duties on Canadian goods worth roughly $20 billion, Canada retaliated with reciprocal taxes on an equal amount of American products. The new duties cover about 5.5 % of bilateral trade in goods, a figure that analysts say will dampen the overall economic impact. Yet for the entrepreneurs who rely on cross‑border commerce, the effect is far from muted.
Small‑Business Pain Points
Owners of four small firms—two in the United States and two in Canada—shared how the trade war is eroding their margins. They all face a combination of higher tariffs, a spike in shipping costs, and a climate of consumer boycotts that have already begun to curtail orders.
Vermont Cheesemaker Sees Lost Canadian Sales
Jasper Hill Farm, a family‑run artisan cheese producer in Greensboro, Vermont, has felt the impact almost immediately. Co‑founder Mateo Kehler explained that the first wave of U.S. tariffs caused Canadian wholesale customers to cancel holiday orders, even though cheese itself was not among the goods subject to new duties. Kehler believes the backlash stems from Canadian resentment toward the U.S. administration’s rhetoric, which he says has sparked a boycott movement.
Beyond lost sales, the company now faces higher input costs. Fuel for trucks and farm equipment has surged because of the Iran conflict, and suppliers are passing on their own price hikes. “It’s like death by a thousand cuts,” Kehler said. “Between the rising cost of energy and the tariffs, the inflationary pressure on the inputs across almost every aspect of our business is just being ratcheted up.”
Canadian Distillery Equipment Supplier Hits 50% Duty
On Vancouver Island, Revival Stillworks makes and installs distillation equipment for craft spirit producers. The company’s products were previously duty‑free under the United States‑Mexico‑Canada Agreement, but the new tariffs now impose a 50 % tax on items crossing the U.S. border. Co‑founder Darcy Lane noted that the equipment ranges from $250,000 to $2 million, making the duty a significant financial burden.
Lane said the company has “millions of dollars worth of orders” that were slated for the next four to six months. The sudden imposition of duties caused one U.S. client to cancel a project last year, and many others are now re‑evaluating whether to proceed. With shipping costs already inflated by the war in the Middle East, Lane is exploring alternative markets, such as the local marine industry, to keep his workforce employed.
Musician‑Gear Manufacturer Faces Silent Killers
In Nashville, Tennessee, AmpRx produces power‑conditioning devices for guitar amplifiers and recording studios. CEO Cassandra Sotos reports that Canadian demand has dropped even though the company’s flagship product is not subject to the new U.S. tariffs. She suspects that Canadian customers are wary of potential import charges or simply uneasy about buying from a country that has become a trade adversary.
Sotos also highlighted the double blow of higher shipping costs. The war in the Middle East has pushed freight rates for imported components to two or three times their pre‑war levels. “At times, this aspect of the global situation acts as a silent killer for small to medium businesses,” she said. “Just as you figure out how to manage the increase from tariffs, you get the second punch to the gut with the shipping estimate.”
Honey Industry Faces Market Flood and Tariff Threats
Peter Awram, CEO of Worker Bee Honey Co. in Rosedale, British Columbia, warned that a new U.S. tariff on Canadian honey could destabilise the industry. The United States had been the market for about 60 % of Canadian honey exports. Canada’s reciprocal 50 % duty on American honey does little to help, as the market is already saturated with cheaper, counterfeit honey from India and China that carries American paperwork.
Awram said that many Canadian beekeepers will likely try to boost domestic sales, potentially flooding the market and driving prices even lower. “If this tariff stays in place for long, it will put a large number of commercial beekeepers out of business,” he warned.
What Comes Next?
All four businesses are watching the political and economic landscape closely. While some are considering diversifying their customer base or shifting to domestic markets, others are hoping that diplomatic negotiations will ease the tariff pressure. Until then, the combination of trade duties and soaring energy costs will continue to strain small‑business operations on both sides of the border.
Why it matters
Small enterprises form the backbone of the North American economy; when trade policies and geopolitical tensions squeeze them, the ripple effects can hit jobs, local supply chains, and consumer prices.
Key points
- U.S. and Canada have imposed 50 % tariffs on $20 billion worth of goods each
- Small firms report lost sales, higher input costs, and shipping inflation
- Vermont cheesemaker faces Canadian boycott and fuel hikes
- Canadian distillery equipment maker now pays 50 % duty on U.S. exports
- Nashville audio‑gear producer sees demand dip despite no direct tariffs
- Canadian honey industry threatened by U.S. tariff and market flooding
Frequently asked questions
What goods are now subject to the new tariffs?
The tariffs target a range of products, including wine, whiskey, selected motorcycles, dairy ingredient whey, and honey, among others, with a 50 % duty imposed on many items.
How are energy costs affecting small businesses?
The war in the Middle East has increased fuel prices, raising transportation and production costs for businesses that rely on cross‑border shipping and imported components.
Can small businesses appeal the tariffs?
Businesses can file appeals through the U.S. International Trade Commission or Canadian Trade Commissioner Service, but the process can be lengthy and costly.
