North American businesses brace for collapse as US-Canada tariff war escalates

Cindy Baldassi's jewellery business in Calgary depends almost entirely on American customers. Three-quarters of the amethyst and sea glass pieces she sells through her company, CindyLouWho2, cross the border to buyers in the United States. But last weekend, when trade negotiations between Washington and Ottawa collapsed, both governments announced they would impose 50% tariffs on each other's goods. For Baldassi, the math is brutal. Most of what she sells now falls under the new American levies. To keep the business alive, she will need to raise prices by half. "It's quite likely that it will wipe out most of my US sales," she told the BBC. "I expect that at least half of my business will be gone."

She is not alone in that calculation. The tariffs, which took effect on Saturday and will expand when Canada retaliates on September 8th, are hitting roughly $20 billion worth of Canadian exports to the United States—about 5% of what Canada ships south annually. But the damage extends far beyond the numbers. Michael Saifer runs Lind Furniture, a 60-year-old Ontario company that has sold leather pieces to major retailers like Costco and Sears. When Trump took office last year and first imposed tariffs, customers immediately froze their orders. Now, facing a second wave, Saifer is blunt about the odds. "Everyone wants to sell to the Americans—they can buy from whoever they want," he said. "I don't know that we're going to win a war with them; we may get killed." Canada is especially vulnerable because 70% of its exports go to the United States. There is nowhere else to pivot.

The timing has created a trap for retailers on both sides of the border. Matteo Sgaramella, who runs Outclass, a Toronto menswear brand, placed orders with American stores months ago. Those shipments will arrive in September, but now with a 50% tariff attached. He cannot simply call his customers and ask them to absorb the cost. "If I contact them now and tell them, hey, you know, you may get an extra 50% bill from UPS on top of what you need to pay me for this shipment, they're all going to say, 'no way, don't ship it,'" he said. The burden lands on him. Sgaramella's company is relatively insulated—only 20% of his sales come from the US—but he sees the broader picture clearly. "Big business can, you know, always find a way... but small businesses are going to get smashed by this."

In Portland, Oregon, Mike Roach and Kim Osgood own Paloma Clothing, a shop that has operated for 51 years. Their best-selling item is a pillow designed by Osgood and manufactured by a Montreal company. It retails for $59. With the tariffs, the wholesale cost would push the retail price to somewhere between $86 and $90. "Gift items are really price-point sensitive; people have in their mind what they're going to pay for a gift, and they're not going to pay more than that," Roach said. The couple plans to absorb the cost and hold the price, hoping the situation resolves quickly. But they had no warning. "It would be one thing if we had three months' notice; that would be something you could plan around, do some work with the vendors, but when it happens literally overnight you're really stuck," he said.

The damage is not confined to supply chains. Bill Easton owns Terre Rouge Wines in California. For the past year and a half, he has been unable to ship his wine to Canada due to a boycott of American alcohol. He is paying $2,400 a month to store inventory in a warehouse, waiting for the trade war to end. Even if it does, he cannot pass that cost to his Canadian customers. "The wine has just gotten better in the warehouse, but I can't expect my customer in Canada to pay that extra cost that I've assumed over the last year and a half," he said.

In Bellingham, Washington, just 25 minutes from the Canadian border, Heather Seevers runs Northwest Yarns and Mercantile. Her shop has seen Canadian foot traffic drop 20% since the tariff war began. Some customers have sent emails saying they cannot support an American business because of what they perceive as anti-Canadian rhetoric from the Trump administration. Seevers understood their position. But the combination of fewer customers and higher prices has forced her to launch a community fundraising effort to stay open. When the new tariffs hit over the weekend, she saw another layer of trouble. "It's going to get worse before it gets better," she said. "It's going to take years and years and years to get a relationship back with Canada, and I think these new tariffs are digging us deeper into a hole." The cross-border economy that once flowed freely is now fractured, and the people who built businesses on that flow are watching them crack.