How SMEs Are Adapting to Trade Turmoil

Highlights

• Small and medium enterprises (SMEs) across the country have adapted rapidly to volatile trade conditions in 2025. Canadian firms quickly responded to surging US tariffs by complying with the Canada-US-Mexico trade agreement (CUSMA), which helped shield the vast majority of exports from duties. They also diversified their suppliers to more trade-friendly regions.
• But uncertainty has been damaging nonetheless. Smaller businesses are less insulated than larger ones from frequent tariff changes, swings in the exchange rate and cost increases. They also lack the negotiating power of larger firms, which means that many have had to bear much of the burden of tariff costs, instead of passing it on to their customers.
• Trade diversification is becoming a vital strategy for exporting SMEs, although progress will be measured in years as opposed to months.
• Interprovincial trade is gaining traction, with significant progress in reducing internal barriers and SMEs reporting they are increasingly turning to Canadian customers and suppliers.
• Government support has ramped up at both federal and provincial levels, helping SMEs manage tariff impacts and diversify export markets.
• The SME trade profile is evolving, with more immigrant-led and micro-sized businesses entering international markets, increased exports to non‑US destinations, and a growing role for digitally delivered services.
• Many conditions are needed for SMEs’ future success, including continued diversification efforts, measurable advances in interprovincial trade, investments in innovation, adapted and sustained government support, and minimal administrative burden to doing business.