The ongoing threats of U.S. and retaliatory Canadian tariffs continue to cause havoc for businesses across the country, including many small businesses in Waterloo Region. The unprecedented trade war between the U.S. and Canada has caused confusion for business owners and consumers and wiped an estimated $4 trillion from the S&P 500 as of Mar. 4, 2026.
The trade war began on Feb. 1, 2025, when Donald Trump, U.S. president and former reality show host, first announced a 25 per cent tariff on Canadian-manufactured goods across the board.
Two days later, Trump delayed the tariffs for 30 days. On Mar. 4, 2025, the 25 per cent tariffs took effect, with Canada immediately placing $30 billion worth of retaliatory tariffs on U.S. goods.
On Mar. 6, 2025, Trump paused tariffs on Canadian goods compliant with the United States-Mexico-Canada Agreement (USMCA). While the U.S. has paused many of its tariffs for now, Canada has kept its retaliatory tariffs in place. Trump announced the U.S. would impose new tariffs on multiple countries, including Canada, on Apr. 2, 2025.
Azim Essaji, an associate professor at Wilfrid Laurier University’s Lazaridis School of Business and Economics, said he believes that, unlike the previous threats, the Apr. 2 U.S. tariffs will take effect and lead to additional retaliatory tariffs from Canada.
“I think the retaliation will be targeted. It is not going to be across the board. The government has already placed tariffs in a strategic way to try and cause the maximum amount of impact in the United States. I think it’ll continue to do so, but there will be tariffs, and they will be fairly significant,” Essaji said.
Shant Sarmazian, builder account manager at Sarmazian Bros. Flooring, said that while there are no tariffs on flooring products going into the U.S., the Canadian tariffs on U.S.-made goods are impacting the company’s business.
“Take Mohawk Carpet Mills out of Calhoun, Georgia. When their carpets come into Canada, they’re subject to a 25 per cent tariff. They held off for a little while but eventually said they were going to charge us 15 per cent of the tariff and eat the other 10 per cent,” Sarmazian said.
Sarmazian Bros. Flooring sells directly to consumers or to general contractors for large projects. While consumers who purchase from its three showrooms will not see an immediate impact on pricing, Sarmazian said they are dealing with considerable losses from orders signed with general contractors before the tariffs were put in place.
“It gets tricky because we have contracts in place with these guys, and it’s hard to go back and say, ‘Hey guys, you know, there’s a 10 per cent increase, or this 15 per cent increase,.’ or whatever it may be,” Sarmazian said.
Sourcing Canadian equivalents for many of its products is one way the company is working with its general contractors to reduce the effects of tariffs.
“We always saw this coming, and we would tell builders about Canadian mills that produced great product. Many sat on the idea until they heard about the tariffs, and now we’re getting calls that they want to look at Canadian alternatives,” Sarmazian said.
Curt Crossman, owner of Civilian Screen Printing, said he has received requests for Canadian-made alternatives for t-shirts, hoodies and other clothing items.
“We’ve had a lot of demand for people asking for made-in-Canada goods. There is pride in having Canadian-made goods. People are willing to pay a little extra to keep those jobs in Canada,” Crossman said.
One of the challenges Sarmazian and Crossman see in Canadian alternatives is production capacity. The increased demand for many of these products is leading to delays in delivery. Crossman added that adding capacity with employees and new machinery is not always an option, especially with Canadian tariffs on U.S.-manufactured equipment.
Crossman said the company was planning to purchase a new dryer, which can cost from 70,000 USD to 100,000 USD. The threat of a potential 25 per cent tariff has led Crossman to delay the purchase.
“You have to really look at the business case—can I just wait until this whole thing plays out? That is where we are right now. That’s 100 per cent of a sale that the dryer manufacturer in Chicago has lost. I’ve talked to other screen printers, and this delay in purchasing is fairly common now,” Crossman said.
Across town at Red Wing Shoes on Fairway Rd. S., owner Steve Hagarty is facing a similar challenge with the added challenge difficulty of being a U.S. brand. Hagarty owns the Kitchener dealership for the Minnesota-based footwear company, which opened in April 2023.
Hagarty said business was going well until the U.S. announced its tariff plans in February 2025.
“We’ve had some nice growth here in our second year, and it’s just disappointing that this sort of unforeseen roadblock presented itself to us,” said Hagarty.
Hagarty believes many consumers are holding off on purchases due to economic uncertainty.
“I think people are very concerned about their jobs, so they’re not spending. All retail is being affected by this, not just us,” said Hagarty.
Like some of Sarmazian’s U.S. suppliers, Red Wing has offered to cover the 25 per cent tariff for its Canadian dealers.
“We’re very fortunate to be partnered with a company that understands and is sensitive to the challenges that we’re having here in Canada. They’re a great partner, and they’ll see us through this,” Hagarty said.
As the next deadline approaches, many small business owners are holding their breath, unsure of what the next wave of tariffs will bring. While there are efforts at every level of government to soften the blow, Professor Essaji said the region’s heavy reliance on cross-border trade and manufacturing makes it particularly vulnerable.
“This is almost the region I worry about most in the country. If we have high unemployment in the economy, certain businesses will not survive because consumers will not spend,” Essaji said.
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