With the US and Canada locked in a trade war, fears of a recession lurk
Analysts say Canada may lose 100,000 jobs under the current tariffs and could go into recession if the USMCA pact ends.
The ongoing trade war between Canada and the United States has compelled numerous small and medium-sized businesses to reconsider their production processes. One such company, The Unscented Company, based in Montreal, has decided to bring its soap production back to Canada after realizing the financial implications of the current tariffs.
Founder and CEO Anie Rouleau explained that the tariffs would cost the company $150,000 by the end of 2026, which was a significant enough factor to drive a plan towards domestic manufacturing. While the company already produces 80 percent of its stock in Canada, Rouleau is now moving towards more local sourcing for ingredients.
She acknowledged that this might increase costs in the short term, but is willing to postpone profitability for the sake of a more sustainable economy.
Another company, Chapman’s Ice Cream, also announced its commitment to reshoring production. The company plans to supply over 70 percent of its ingredients from Canada or other countries by next year, following the initial round of tariffs imposed by President Donald Trump. COO Ashley Chapman reassured customers that there will be no price increase for the ice cream until March 2028.
This move is part of a larger understanding that supply chains were so integrated across the three countries due to NAFTA and CUSMA that the competencies in certain areas were developed elsewhere. Saibal Ray, chair of supply chain management at McGill University, noted that while the transition is complex and expensive, it is a necessary step for Canadian businesses to develop internal capabilities.
Ray emphasized that small and medium-sized enterprises (SMEs) especially struggle with this, as their specialized roles make it impossible for them to handle everything on their own at a large scale. He urged for a more strategic approach to onshoring, acknowledging that while it is difficult and costly, it is inevitable for Canada to face these challenges in the future.
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