How Canadian entrepreneurs are adapting to tariffs

9-minute read

Published November 07, 2025

Tariffs from the U.S. began to hit Canadian businesses in early 2025. Throughout this time, BDC has been surveying entrepreneurs to understand how they are being impacted by the tariffs and their ramifications for the economy.

Our latest survey, conducted with almost 540 entrepreneurs across Canada in late September, found that entrepreneurs are still worried—but they’re also showing agility and resilience.

Compared to the start of the year, fewer businesses are reporting severe impacts. Currently, the bigger challenge is mounting economic uncertainty. Business owners are also increasingly concerned about volatile costs and unpredictable demand.

The numbers tell us that businesses are finding ways to cope.

Survey highlights

91% of Canadian SMEs have acted (or plan to act) to reduce tariff impacts.
Economic uncertainty is affecting 84% of entrepreneurs—up 15 points since March.
Fewer businesses are reporting declines in sales and margins, signalling growing resilience.

Tariffs still sting—but fewer businesses are hurting

Our survey found that:

67% of small and medium businesses are affected by U.S. tariffs—down a touch from 71% in March.
46% are affected by Canadian tariffs—down from 59%.
Fewer businesses are reporting reduced sales, margins or competitiveness.
Compared to March, twice as many respondents said the tariffs are having “no impact.”

In other words, tariffs still hurt businesses, but many entrepreneurs have learned to live with them. They’re adjusting their pricing, diversifying their suppliers and finding efficiencies.

In addition, the share of businesses reporting reduced sales, shrinking margins, or higher input costs has fallen by double digits since March—evidence that entrepreneurs are adapting to a tougher trade environment.

Worries about layoffs and closures have also eased significantly.

It would be a stretch to call this optimism, but the numbers tell us that businesses are finding ways to cope.

Graphic 1: How tariffs have impact Canadian businesses

What’s keeping entrepreneurs up at night?

Even as tariff impacts ease, broader economic volatility is weighing more heavily on business owners. Concerns about slowing growth, fluctuating costs and policy changes are making long-term planning harder across sectors and business sizes.

The great majority of entrepreneurs—about 84%—say they are concerned about economic uncertainty (up 15 points since March). This issue now outranks the tariffs as the biggest perceived threat. Businesses in the technology and information industry (96%) and those in manufacturing (92%) were more likely to report being impacted by uncertainty.

Lingering but lower-ranked concerns included consumer and business spending reductions, decreasing volumes, margins or profits, and diminishing competitiveness.

Thirteen percent of respondents were worried they might need to lay off staff (a significant drop from 31%), while only 7% were worried they might need to close the business (versus 12% previously).

Just 3% of respondents said they planned to relocate production facilities to the U.S., down from 7% who had this approach in mind in March.

What actions have paid off?

The survey found that the vast majority of businesses (91%) have taken or plan to take steps to manage tariffs. The top three strategies were:

passing on some or all the added costs to customers (43%)
cutting costs across the business (37%)
diversifying supply chains (30%)

Other, less popular tactics included expanding into new markets, negotiating with suppliers, forming strategic partnerships or alliances, increasing inventory levels, and investing in automation to reduce production costs.

A notable good-news story is that just 3% of respondents said they planned to relocate production facilities to the U.S., down from 7% who had this approach in mind in March.

Overall, the findings indicate that Canadian entrepreneurs are not waiting for policy fixes—they’re finding their own solutions, proving that resilience is a skill honed under pressure.

Graphic 2: Actions taken by Canadian entrepreneurs to limit the impact of tariffs on their business

What it all means for entrepreneurs

Ultimately, the latest survey shows that Canadian entrepreneurs aren’t just weathering tariff challenges—they’re evolving. Businesses that were affected by U.S. tariffs were:

7 times more likely to expand into markets less affected by tariffs
6 times more likely to implement cost-cutting measures
5 times more likely to offer new services or products not affected by tariffs

Meanwhile, those affected by Canadian tariffs were more likely to explore alternative inputs, diversify their supply chains and invest in automation.

These findings highlight the importance of sound financial management, planning and proactivity:

Canadian entrepreneurs have shifted their posture rapidly to tackle tariffs head on. With the right financing, advice and adaptability, they have the capacity to emerge stronger.

Next step

Need more help to deal with tariffs and related uncertainty? Discover how BDC can help with tailored loans and expert advice.