Canada-U.S. business relationships have weakened during trade war, CFIB says
As CUSMA negotiations move into a new phase after the U.S. government’s failure to renew the trade agreement with Canada, the Canadian Federation of Independent Business (CFIB) is calling on Prime Minister Mark Carney’s Liberal government to ensure small business priorities remain front and centre.
On July 1, when the Trump administration decided it would require annual reviews of the Canada-United States-Mexico Agreement instead of renewing it in its current form, minister responsible for Canada-U.S. Trade Dominic LeBlanc issued a statement after a meeting with U.S. and Mexico counterparts.
Global economic uncertainty
“In this meeting, I reaffirmed Canada’s unwavering support for the CUSMA and its renewal,” said LeBlanc.
“Canada approaches these discussions from a position of strength and with the goal of preserving and strengthening one of the most successful trading relationships in the world,” he continued. “At a time of global economic uncertainty, Canada is a stable, reliable and trusted partner.”
Small business owners in Canada “are frustrated” with the uncertainty, said Dan Kelly, president of the CFIB, Canada’s largest association of small and medium-sized businesses with 103,000 members across the country.
He said the ongoing uncertainty around tariffs and trade has delayed real decisions on investment and growth, while adding that “protecting Canada’s existing CUSMA exemptions must remain government’s top priority.”
“While Canada’s continued tariff-free CUSMA access has helped enormously,” said Kelly, “small businesses are facing several major pain-points, including sectoral tariffs on steel and aluminum and challenges for small volume exporters in demonstrating CUSMA compliance.”
Most SMEs want best deal possible
According to the CFIB, two-thirds (64 per cent) of small businesses in Canada support taking the time needed to secure the best possible terms for renewed or renegotiated CUSMA, compared to only 16 per cent who would prefer a quicker but potentially less favourable agreement.
The CFIB maintains that Canada–U.S. business relationships have weakened significantly during the trade war, with 75 per cent of SMEs saying the tariff fight has strained their relationships with U.S. partners or clients in April 2026, up sharply from 49 per cent in March 2025. Only 40 per cent of small firms now view the U.S. as a reliable trading partner.
As a result, nearly half (48 per cent) of Canada’s SMEs trading with the U.S. have shifted to non‑U.S. suppliers or customers. Among those, nearly three-quarters are pivoting to domestic markets. Beyond Canada, Asia (40 per cent) and EU countries (39 per cent) are the top alternatives though high shipping costs, border delays and complex custom procedures limit broader trade diversification.
No replacement for U.S. market
“While business owners are doing what they can to diversify their trade, we’re never going to be able to entirely replace the 340-million-person market that exists right along our border,” said Kelly. “That’s why it’s so important to get this right and get a deal that business owners are confident will hold for years to come.”
As talks continue, according to Kelly, negotiators should seek out areas where there is common ground for improvement, including making CUSMA more accessible to small business owners, streamlining customs rules at the border and clarifying rules of origin.
“As negotiators look ahead to the next version of the agreement, they need to understand it’s not an easy process for small businesses to navigate,” said Corinne Pohlmann, CFIB executive vice-president of advocacy. “Unclear rules of origin, and high compliance and administrative costs mean some small firms are forced to weigh paying tariffs instead of using CUSMA.
“We can do better,” she continued. “Ottawa must ensure that small business voices are included in trade negotiations and secure a deal that is clear, accessible and works for businesses of every size.”
Uncertainty hangs over businesses
In an interview with Newsfirst Multimedia, a spokesperson for the CFIB explained what the fallout might be for Canada’s small and medium-size businesses in light of the non-renewal of CUSMA.
“I think the main concern on our end is that it just continues the ongoing uncertainty that has plagued small business owners since the trade war started,” he said. All the same, he said there is some solace to be found in the July 1 deadline coming and going without great fanfare.
“Between the news and what the President was saying, maybe it was a little bit of cause of concern for the public. But knowing that CUSMA remains in place and that the deal doesn’t just end on its own and there’s a whole annual process to go through, I think that provides a little bit of certainty amidst the uncertainty.
“But the main thing as negotiations go forward and we continue in this uncertain situation, we don’t know what’s going to happen with the deal, we don’t know what changes are going to be made,” he added.
“And for small business owners across the country, that means they’re going to continue to delay investment decisions, hiring decisions, business decisions until the ground becomes a little bit more stable.”
