Tariffs on Canada and Mexico Take Effect – What Small Businesses Need To Know

After months of rumors and speeches and weeks of back and forth, Trump tariffs are now in place, effective Tuesday, on Canada and Mexico. Additional tariffs are being put on China as well.

This means imports coming into the US from these countries will have additional duties attached, driving up costs for businesses that rely on such imports. Companies large and small have voiced significant concerns that higher costs for goods will be passed on to consumers through higher prices.

Here are the numbers, and what it could mean for you and your small business.

Trump Tariffs, and How We Got Here

These tariffs aren’t put in place to fight a trade issue but rather fighting a border security issue. The Trump Administration accuses Mexico and Canada of allowing illicit drugs to flow into the U.S. and are using these tariffs as a negotiating tactic to secure new concessions from these countries.

This is a large jump from the first Trump administration where he signed the USMCA trade agreement to be “the largest, most significant, modern, and balanced trade agreement in history.”

Less than five years later, that agreement appears to be on rocky ground as the below tariffs go into effect:

Additionally, President Trump announced in his speech before Congress on Tuesday that reciprocal tariffs will “kick in” on April 2.

This will impact a variety of everyday products, including automobiles, groceries, consumer electronics, and more. Some products may have updated price points in the coming days, while others could take months to come to fruition.

President Trump boasts about the sweeping tariffs, but they aren’t without immediate consequences. Canada plans to implement 25% tariffs on nearly $100 billion of U.S. imports. Mexico’s president has said the country will announce its own strategy this weekend. Markets saw immediate selloffs as investors are anxious about what’s to come.

U.S. Commerce Secretary Howard Lutnick before the president’s speech to Congress on Tuesday night said tariffs could be renegotiated as soon as Wednesday. It remains unclear how a compromise might be reached and what exactly would be covered by such a deal.

The major concern for most business owners: uncertainty about what this means for them and the future of their business. Here are some suggestions for how business owners can prepare for the impacts of the new US trade policy.

What Small Businesses Can Do About Tariff Uncertainty

The sentiment among businesses and consumers is largely the same: this isn’t a good thing. Estimates vary, but if tariffs remain in place at these levels consumers could end up spending thousands of dollars more per year for the same goods.

The U.S. Chamber of Commerce represents American small businesses and has been adamant about how tariffs will negatively impact small businesses. In a statement the chamber’s chief policy officer Neil Bradley said, "Tariffs will only raise prices and increase the economic pain being felt by everyday Americans across the country," “We urge reconsideration of this policy and a swift end to these tariffs."

A leather goods storeowner in San Diego told CBS 8 that she has “no choice” but to raise prices. This is one of many small businesses that have decried the tariffs.

However, not all businesses can afford to raise their prices. Many goods and services have already been hit by high levels of inflation over the last three years, and consumers simply won’t continue to pay higher prices for the same goods. This has become a reality for many business owners and is demonstrated in the Biz2Credit Small Business Earnings Report as recent data has shown that earnings have been squeezed by rising costs outpacing revenues.

If you’re the owner of a small business being negatively impacted, there are several things you should consider doing in the wake of this economic turn:

Advocate Through Industry Groups & Lawmakers

Small businesses have a stronger voice when they band together. Joining industry associations, local chambers of commerce, or trade organizations can amplify concerns and push for policy changes. These groups often lobby lawmakers on behalf of businesses affected by tariffs. For critical industries like food and energy, there is hope of potential carveouts coming from the White House.

Diversify Suppliers & Explore Domestic Alternatives

Relying on a single supplier—especially one affected by tariffs—can be risky. Expanding your supplier network to include vendors from countries with lower or no tariffs can help mitigate cost increases. Additionally, consider switching from international to domestic suppliers as it now may be less cost prohibitive.

Negotiate & Adapt Pricing Strategies

Tariffs often lead to increased costs, but businesses can negotiate with suppliers for better terms, bulk discounts, or longer payment cycles to ease financial pressure. If price increases are unavoidable, consider a gradual adjustment rather than an immediate hike.

Final Thoughts

The economic impact of the tariffs is difficult to estimate at this point, but consumers and businesses alike will likely feel some economic pain. Additionally, there is debate on whether tariffs will add to stubborn inflation.

As a small business owner during economic uncertainty, remaining agile and keeping options open such as new business funding can potentially make a significant difference in your business’s performance.