Navigating Instability: How Tariffs and Economic Uncertainty Shaped SMEs in the First 10 Months of 2025 (BDC Capital)

Summary

• 75% of SMEs surveyed in January 2025 were planning action to mitigate the impacts of tariffs.p.3
• Canada responded with retaliatory tariffs on $31 billion worth of American goods.p.4
• 32% of SMEs stated that they had already laid off staff or were considering it.p.4
• SMEs affected by U.S. tariffs were 7 times more likely to expand into markets less affected by tariffs.p.6

Key insights

1. 43% of SMEs said the primary impact of tariffs would be a rise in the cost of goods sold.p.3
2. 33% of SMEs said they would pass on some of the increased costs to customers through higher prices.p.3
3. 27% of SMEs said they would implement cost-cutting measures across their business.p.3
4. 47% of SMEs said their business would be negatively impacted by Canadian retaliatory tariffs, a proportion that decreased significantly in the past 6 months.p.5
5. SMEs affected by economic uncertainty are nearly twice as likely to take at least one action to mitigate its effects.p.5
6. SMEs impacted by U.S. tariffs were 6 times more likely to implement cost-cutting measures.p.6
7. SMEs impacted by Canadian tariffs were 4 times more likely to explore alternative inputs not subject to tariffs.p.6