Trade by small and medium-sized enterprises (SMEs) with the U.S. ‘is an important part of Canada’s economy. SMEs are defined as those with 1 to 499 paid employees. According to Innovation, Science and Economic Development Canada, as of December 2024 there were 1.10 million employer businesses in Canada. Of these, 1.08 million (98.2%) were small businesses, 16,953 (1.5%) were medium-sized businesses, and 3,380 (0.3%) were large businesses. Also, as of 2024, small businesses employed 5.8 million individuals in Canada, or 46.6% of the total private labour force, and medium-sized businesses employed 2.1 million individuals (17.0% of the private labour force). Moreover, well over half of the Canadian labour force (almost 64%) was employed by SMEs. In the same year, Canada’s exports of goods totalled $712.8 billion, of which 37.9% was attributable to SMEs. A total of 48,036 Canadian enterprises exported goods, the vast majority of which were SMEs (73.3%), with the main destination being the U.S.
SMEs are well represented in Canada, as evidenced by the Canadian Federation of Independent Business (CFIB) which represents about 103,000 small businesses and the Canadian Chamber of Commerce. The Chamber is the national voice of business uniting over 400 chambers of commerce and boards of trade representing more than 200,000 organizations across every region of Canada. Along with other G7 countries, these organizations stand ready to support the G7 governments in modernizing a much-needed multilateral trading system, for their mutual future prosperity and growth.
The United States’ trade and tariff war with Canadais disrupting decades of cross border cooperation. On both sides of the border, this trade war has created havoc among SMEs who for years benefited from free trade agreements between the two countries, the latest being the Canada-US-Mexico free trade agreement (CUSMA). Effective February 24, 2026, among the current tariffs affecting Canadian exports into the U.S., the Trump administration introduced a 10% tariff on non-CUSMA compliant goods. This has added an additional cost on Canadian SME exports, whereby a number of businesses have simply decided to pay given the paper trail complexities associated with its current application vis-à-vis CUSMA. In addition, effective August 29, 2025, the administration eliminated the U.S. de minimis treatment for low-value shipments, which affects goods valued at $800 or less. This especially affects the exports by the smallest Canadian businesses which are now subject to all applicable duties, thereby raising the costs of their products for American consumers. Without American consumer demand, many of the Canadian boutique class businesses will have not choice but to simply give up on exporting directly to U.S.customers.
Unlike the impact on larger companies (500 or more paid employees), such as those in the steel, aluminum, automotive and forestry sectors, SMEs on both sides of the border find it difficult to discover alternative markets for their products. This situation implies that both American and Canadian SMEs will find it harder to export their products within the North American market.
The impact on SMEs unfortunately is often forgotten in light of the majority of attention being given to those larger companies hit more extensively by tariffs. This is unfortunate because SMEs often represent the best chance for employment growth in both countries. In the past, SMEs were encouraged to expand their reach into the North American markets, resulting in the emergence of more and more franchises and increased business across our borders. Now, the lost of open trade relations between the two countries has most definitely affected SMEs, and the potential for labour force growth in both. This impact should not be discounted and ignored, especially since both Canada and the U.S. fundamentally support free enterprise and capitalism in all its forms.
FROLITICKS 
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