In today’s interconnected world, international trade decisions can quickly ripple through our communities. For small business owners across industries, including agriculture, the news of incoming U.S. tariffs may understandably raise questions and concerns. How will these changes affect your bottom line, and what can you do to prepare? Whether you're a farmer or small business owner, here’s what you need to know and how to prepare.
Understanding Tariffs and Their Local Impact
Tariffs are taxes placed on goods imported into a country. When the U.S. imposes new tariffs on goods from other nations, including Canada, the price of those imported items increases for American buyers. While this may protect U.S. producers, it also tends to reduce demand for Canadian exports.
For Canadian small businesses, this can lead to:
- Decreased Export Demand: U.S. buyers may purchase less due to higher costs, affecting revenues for farms, small businesses, and other industries that serve farmers (such as a factory that produces parts for tractors).
- Input Cost Increases: Many Canadian producers rely on American machinery, parts, or raw materials. Tariffs may make these more expensive.
- Supply Chain Disruptions: Longer lead times or unpredictable pricing from cross-border suppliers could affect your operations and planning.
- Market Volatility: Changes in trade policies often shake up markets, impacting prices for everything from livestock to equipment.
Five Strategies for Protecting Your Small Business
While global economic policy is beyond your control, your response doesn't have to be. Here are five ways you can proactively steward your business through uncertainty:
1. Review and Strengthen Your Business Budget
Evaluate your cash flow and expenses with fresh eyes. Look for ways to reduce non-essential spending and prepare for potential fluctuations in revenue or input costs. A buffer - even a small one - can be a business lifesaver in lean times.
Tip: Consider working with your Account Manager to identify areas for savings or reinvestment.
2. Diversify Your Revenue Streams
If your business relies heavily on U.S. customers or imports, explore ways to broaden your market. That might include:
- Selling directly to Canadian consumers through different, new, or innovative platforms.
- Collaborating with other producers to create value-added goods or business models (ie. equipment sharing).
- Diversified revenue streams, particularly ones that compliment your main business line.
A more diverse income base helps cushion against sector-specific shocks.
3. Strengthen Local and Regional Partnerships
In times of change, relationships are a powerful resource. Connect with local suppliers, cooperatives, and fellow entrepreneurs. These connections can lead to bulk purchasing opportunities, joint marketing efforts, and shared logistics.
4. Evaluate Your Supply Chain
Audit your supply sources and identify where you're dependent on imported U.S. goods or materials. Are there Canadian or alternative suppliers available? Even if local options are slightly more expensive, they may provide more stability and resilience in a volatile market.
5. Access Support and Advice Early
Don’t wait until a challenge becomes a crisis. Whether you need working capital, refinancing, or advice about managing operational risk, Kindred is here to help. We offer values-aligned business banking services and can offer you the advice and solutions you need during these unpredictable times.
Specific Guidance for Agricultural Producers
If you're in the agricultural sector, the impacts of tariffs may be particularly acute. Here are a few additional steps to consider:
- Monitor Commodity Prices: Stay informed about pricing trends for your crops or livestock. Knowing when and where to sell can make a big difference.
- Secure Input Contracts Early: Where possible, lock in prices for inputs, feed, and equipment before potential tariff-driven increases.
- Participate in Government Programs: Keep an eye on available support from federal or provincial agriculture ministries. Subsidies, grants, or emergency relief may be available.
Change is inevitable. At Kindred, we want to support you and your business as you navigate these uncertain times. If you’d like to review your business finances, plan for the road ahead, or simply talk through your concerns with someone who understands, we invite you to connect with one of our Account Managers. We're here to walk alongside you. Book an appointment today.