OTTAWA — Canadian shippers are beginning to delay merchandise and postpone delivery schedules as they scramble to find the additional funds required to move goods across the U.S. border following the introduction of 50% tariffs on a range of Canadian products.
Customs brokers say some manufacturers and exporters had expected their goods to enter the United States without additional tariff costs and are now facing an immediate cash-flow challenge.
U.S. President Donald Trump imposed 50% tariffs over the weekend on approximately US$20 billion worth of Canadian products, affecting sectors ranging from textiles and toiletries to tulips and toys. The move followed the collapse of trade negotiations between Canada and the United States.
For some businesses, the additional duties amount to thousands of dollars per shipment.
Lisa McEwan, co-owner of Toronto-based customs brokerage Hemisphere Freight, said clients producing sweatshirts, metal coils, agricultural machinery and other products have already pushed back shipments while they work out how to finance the additional costs.
“I have six entries right now that I can’t submit until I get paid,” McEwan said.
Customs brokers frequently advance duties and taxes on behalf of importers, meaning the sudden increase in tariff costs can also put pressure on the brokers themselves.
McEwan said some shippers may still be able to avoid the new levies if their shipments were booked before Aug. 22. However, companies that did not meet that timing have only 10 business days to pay U.S. Customs and Border Protection before late-payment penalties begin to accumulate, she said.
“I’ve been on the phone all morning with clients who are wondering what’s going on,” McEwan said.
“I don’t know how sustainable this is. The cash flows on the company are going to be hurt a lot.”
Federal support measures promised for affected industries will provide some assistance, but McEwan described them as a “Band-Aid solution” for most small businesses.
Trade tensions add further uncertainty
The latest tariffs come as Canada prepares its own response.
Prime Minister Mark Carney has said Canada will introduce retaliatory tariffs by Sept. 8, after accusing the United States of attempting to introduce last-minute provisions into a proposed trade agreement that would have restricted Canada’s ability to negotiate trade deals with other countries.
Trump escalated the dispute again on Monday by threatening to increase tariffs on all Canadian vehicles, auto parts and steel to 50% on Jan. 1.
Those proposed measures would be separate from the tariffs introduced over the weekend and would add to existing duties affecting the automotive and steel sectors.
The uncertainty is already being felt throughout Canada’s freight network.
“I think people are still in a bit of shock and trying to assess what’s going on,” said John Corey, president of the Freight Management Association of Canada.
“There’s a lot of product going back and forth that’s maybe affected.”
Although the newly implemented tariffs apply to only around 5% of Canadian exports, their impact could be significant for manufacturers that lack the ability to transfer the additional costs to customers.
For those businesses, the tariffs can quickly turn a previously viable shipment into a financial burden.
Smaller businesses face the greatest pressure
The disruption could extend beyond individual shipments, with economists warning that prolonged trade tensions could weigh on Canadian businesses and the broader economy.
Small and medium-sized companies may be particularly exposed because they generally have fewer financial resources to absorb sudden increases in costs or redirect their supply chains.
“With thinner cash reserves, they will have less ability to diversify. Some businesses will undoubtedly close, even with government support,” said Tu Nguyen, an economist with tax consulting firm RSM Canada.
Nguyen warned that the consequences could include job losses, weaker foreign investment and higher inflation, with sectors such as automotive, steel and lumber among those potentially affected.
For Canadian exporters and logistics operators, the immediate challenge is therefore not only the higher tariff itself, but also the additional cash required to keep goods moving while the trade dispute continues to evolve.
