How Canadian small businesses can navigate US tariffs in 2026

Published Friday 4 September 2026

Table of contents

• What's happening with US tariffs on Canadian goods in 2026?
• How US tariffs affect Canadian small businesses
• Government support programs for Canadian businesses
• How to claim IEEPA tariff refunds as a Canadian business
• Practical strategies to manage tariff costs
• Understanding CUSMA and how it can help
• Navigate tariff costs with Xero
• FAQs on US tariffs and Canadian small businesses

Key takeaways

• The U.S. Supreme Court struck down broad IEEPA tariffs in February 2026, but sectoral tariffs of 25% on steel and aluminum remain in effect along with 10% to 50% duties on copper.
• If your business paid IEEPA tariffs before 24 February 2026, you may be eligible for a refund through the U.S. Customs and Border Protection (CBP) online portal, with processing times of 60 to 90 days.
• Canadian government programs, including the CBSA Duties Relief Program, the Duty Drawback Program, and financing from the Business Development Bank of Canada (BDC), can help offset tariff-related costs.
• Reviewing your supply chain, adjusting your pricing strategy, and strengthening cash flow management are the most practical steps you can take right now to protect your margins.

What's happening with US tariffs on Canadian goods in 2026?

The tariff landscape for Canadian exporters continues to shift rapidly. Most recently, Canada announced counter-tariffs (15%, 25%, and 50%) effective September 8, 2026, on U.S. goods including dairy, agricultural equipment, steel, wood, paper, textiles, plastics, and electronics – a development Canadian businesses need to act on immediately. But to understand where we are now, it helps to look back at how we got here.

The U.S. Supreme Court struck down the broad International Emergency Economic Powers Act (IEEPA) tariffs in February 2026, and U.S. Customs and Border Protection (CBP) stopped collecting the 35% IEEPA duty on 24 February 2026. That was welcome news for thousands of Canadian businesses that had been paying inflated costs on goods not covered under the Canada-United States-Mexico Agreement (CUSMA).

However, the relief was short-lived for non-CUSMA-compliant goods. On the same day, the administration introduced a new 10% global tariff under Section 122 of the Trade Act of 1974, which also exempts CUSMA-compliant goods but applies to everything else that was previously subject to the IEEPA tariff. In practice, this means non-CUSMA exports to the U.S. saw their tariff rate drop from 35% to 10%, rather than disappear entirely.

However, the relief isn't total. Sectoral tariffs on specific goods remain in place, and the broader trade relationship between Canada and the United States continues to evolve. If you export goods to the U.S. or rely on American suppliers, you still need to track which tariffs apply to your products.

Timeline of key dates

Here's a summary of the most important dates to know.

• 24 February 2026: A new 10% global tariff took effect under Section 122 of the Trade Act of 1974, replacing the struck-down IEEPA tariff for non-CUSMA-compliant goods.
• April 6, 2026: Sectoral tariffs on steel and aluminum set at 25%; copper duties range from 10% to 50%.
• 1 July 2026: The mandatory CUSMA joint review took place. The United States declined to extend the agreement in its current form for a new 16-year term, though CUSMA remains in effect until 2036 with existing preferential treatment continuing for compliant goods.
• 8 September 2026: Canada imposes counter-tariffs (15%, 25%, 50%) on U.S. goods including dairy, agricultural equipment, steel, wood, paper, textiles, plastics, and electronics in response to U.S. tariffs imposed August 22, 2026.

These dates matter because they determine which tariffs you may have paid, which ones you're currently subject to, and which refunds you might be eligible for.

How US tariffs affect Canadian small businesses

Tariffs don't just add a line item to your invoices. They ripple through your entire operation, affecting your costs, your pricing, and your ability to plan ahead. For many Canadian small businesses, the past year has meant tough decisions about where to cut and how to adapt.

Impact on costs and margins

The numbers tell a clear story. According to a Merchant Growth survey, 57% of Canadian small businesses have scaled down operations since the trade war intensified. The same survey found that 41% report decreased margins as tariff costs eat into their bottom line.

With new Canadian counter-tariffs effective September 8, 2026, businesses that import U.S. goods face immediate cost increases requiring urgent action.

If you import raw materials or components from the U.S., you're likely paying more for them now. If you export finished products to American customers, your goods may carry higher duties that make you less competitive. Either way, your margins are under pressure.

For businesses in sectors like manufacturing, agriculture, or retail with cross-border supply chains, these added costs can mean the difference between profitability and operating at a loss. Even businesses that don't trade directly with the U.S. feel the effects through higher domestic prices for tariff-affected inputs.

The stress of uncertainty

Beyond the financial impact, the unpredictability of trade policy takes a real toll. A Canadian Federation of Independent Business (CFIB) study found that 75% of small business owners say the trade war has increased their stress levels. Even more telling, 79% cite unpredictable tariffs as a barrier to business planning.

It's hard to set prices, negotiate supplier contracts, or plan inventory when you don't know what duties you'll be paying next quarter. That uncertainty makes it difficult to invest in growth or take on new opportunities with confidence.

Government support programs for Canadian businesses

You don't have to absorb tariff costs on your own. The Canadian government and its agencies offer several programs designed to help businesses manage duties and access financing during trade disruptions.

CBSA Duties Relief Program

The Canada Border Services Agency (CBSA) Duties Relief Program lets you defer or get relief from paying customs duties on imported goods that will be re-exported or used in products destined for export. If you import U.S. materials to manufacture goods that you then sell outside Canada, this program can reduce your upfront costs significantly. You can find more details through the Government of Canada's tariff response page.

To qualify, you'll need to demonstrate that the imported goods are used in production for export. The application process involves registering with the CBSA and maintaining records that show how imported materials flow through your operations.

Duty Drawback Program

The Duty Drawback Program lets you claim a refund on duties you've already paid on imported goods that were subsequently exported. If you've already paid duties on materials that ended up in products sold to international buyers, you can file a claim to recover some or all of those costs.

The key difference from the Duties Relief Program is timing: Drawbacks reimburse duties after the fact, while the relief program prevents you from paying them in the first place. Depending on your cash flow situation, one may suit you better than the other.

BDC and EDC support

The Business Development Bank of Canada (BDC) offers financing solutions specifically aimed at businesses dealing with trade disruptions. This includes working capital loans that can help you bridge cash flow gaps caused by tariff-related cost increases.

Export Development Canada (EDC) provides insurance and financing for Canadian exporters. If you're selling into the U.S. market and facing tariff uncertainty, EDC can help you manage the financial risk through credit insurance and export financing programs.

How to claim IEEPA tariff refunds as a Canadian business

If your business paid IEEPA tariffs on goods entering the United States before 24 February 2026, you may be eligible for a refund. The process runs through U.S. Customs and Border Protection, which means Canadian businesses face some extra steps compared to American importers.

Here's how to work through the refund process:

1. Determine your eligibility. You're eligible if you were the importer of record for goods that entered the U.S. between the start of the IEEPA tariffs and 24 February 2026, and you paid the 35% IEEPA duty on those shipments. Gather your entry summaries, proof of payment, and commercial invoices.
2. Set up a U.S. Customs ACE Portal account. This is the online system CBP uses to process trade transactions. If you don't already have an ACE account, you'll need to register for one. Canadian businesses typically need a U.S. customs broker to help with this step.
3. Arrange a U.S. bank account. CBP issues refunds to U.S. bank accounts. If you don't have one, you'll need to open an account with a U.S. financial institution or work with your customs broker to arrange an alternative payment method.
4. Submit your refund request through the CBP CAPE portal. File your claim through the Consolidated Administration and Processing of Entries (CAPE) portal within ACE. You'll need to reference the specific entry numbers for each shipment on which you paid IEEPA duties.
5. Provide your banking information for the refund. Link your U.S. bank account to your ACE profile so CBP can process the payment directly.
6. Wait for processing. Refunds typically take 60 to 90 days from the date of submission. Track the status of your claim through the ACE portal.

Note that CBP rolled out CAPE in phases through 2026, so your eligibility and timing may depend on your entries' liquidation status. If your entries fall outside the current phase, you may need to file a formal protest within 180 days of liquidation instead. A customs broker can confirm which path applies to your specific shipments.

Key requirements for Canadian businesses

The refund process was designed for U.S. importers, so it presents some unique challenges for Canadian businesses. You'll likely need a U.S. customs broker to navigate the system, especially if you haven't worked with CBP before. You'll also need a U.S. bank account for receiving the refund in USD.

Keep detailed records of every shipment that incurred IEEPA tariffs. Your customs broker can help you pull the right documentation from your entry summaries and cross-reference it with your payment records. If you used a freight forwarder or third-party logistics provider, reach out to them for copies of customs paperwork you may not have on file. The CFIB tariff resource hub also provides guidance for Canadian businesses navigating the refund process.

Practical strategies to manage tariff costs

While you can't control trade policy, you can control how your business responds to it. These practical strategies can help you protect your margins and keep your business running smoothly during a period of trade uncertainty.

Review your supply chain

Start by mapping out every supplier and input that crosses the Canada-U.S. border. Identify which goods carry tariffs and how much those duties add to your costs. Once you have a clear picture, explore whether alternative Canadian or international suppliers could provide the same materials at a lower total cost, including duties.

Diversifying your supply chain isn't just about avoiding tariffs today. It also builds resilience against future trade disruptions. Even if switching suppliers isn't practical right away, knowing your options puts you in a stronger negotiating position.

By September 7, identify any imports of dairy, agricultural equipment, steel, wood, paper, textiles, plastics, or electronics from the U.S., as these will face new counter-tariffs effective September 8.

Adjust your pricing strategy

Absorbing tariff costs entirely will erode your margins over time. Consider whether a partial price increase makes sense for your products or services. Many of your customers will understand that rising trade costs affect pricing, especially if you communicate the reasons clearly.

A tiered approach can work well: Absorb some of the cost increase on your most price-sensitive products and pass more of it through on items where customers are less likely to switch to a competitor. Review your pricing regularly as tariff rates and trade agreements evolve.

Strengthen cash flow management

Tariffs create cash flow pressure in two ways: they increase your costs upfront, and they can delay revenue if customers push back on price increases. Building a cash reserve and tightening your invoicing processes can help you stay ahead of these pressures.

Consider shortening your payment terms with customers and negotiating longer terms with suppliers where possible. Forecasting your cash flow on a weekly or monthly basis, rather than quarterly, gives you earlier warning of potential shortfalls. Check out this guide to understanding cash flow for practical tips. If you're waiting on a tariff refund, factor the 60- to 90-day processing time into your projections so you're not counting on money that hasn't arrived yet.

Understanding CUSMA and how it can help

The Canada-United States-Mexico Agreement (CUSMA) is the trade agreement that replaced NAFTA in 2020. It provides preferential tariff treatment for goods that qualify under its rules of origin, which means products that meet certain content and manufacturing requirements can cross the border at reduced or zero duty rates.

If your products qualify under CUSMA, you may be able to avoid some of the tariffs that apply to non-qualifying goods. The key is understanding the rules of origin for your specific product category. These rules specify what percentage of a product's value must originate in Canada, the U.S., or Mexico, and which manufacturing processes must take place within the CUSMA region.

To benefit from CUSMA, you'll need a certificate of origin that verifies your product meets the agreement's requirements. You can self-certify as the exporter, producer, or importer, but you need to keep records that support your certification for at least five years.

The mandatory CUSMA joint review took place on 1 July 2026. The United States declined to renew the agreement in its current form for a further term, but this doesn't end CUSMA — it remains in effect until 2036, and your existing rules-of-origin benefits continue to apply. Ongoing negotiations may still affect the terms over time, so stay informed through the Government of Canada's trade response page and adjust your compliance strategy if anything shifts.

As tariffs increase, CUSMA compliance becomes even more valuable – qualifying goods avoid the 10-50% duties now applied to non-compliant imports.

Navigate tariff costs with Xero

Managing tariff costs effectively starts with having clear visibility into your finances. Xero's cloud accounting software helps you track expenses by category, monitor your margins in real time, and forecast your cash flow so you can plan around tariff-related cost increases.

With Xero, you can set up reports that separate tariff-related costs from your regular operating expenses, giving you a clearer picture of how trade policy changes affect your bottom line. Automated bank reconciliation and invoicing help save you time on routine admin so you can focus on the strategic decisions that matter most during periods of trade uncertainty.

If you're ready to take control of your finances and navigate tariff costs with confidence, Xero can help your business stay ahead.

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FAQs on US tariffs and Canadian small businesses

Here are answers to some of the most common questions Canadian small business owners have about US tariffs.

How will tariffs affect small businesses in Canada?

Tariffs increase the cost of goods crossing the Canada-U.S. border, which can squeeze your margins if you import materials or export products. Many businesses are also affected indirectly through higher prices from domestic suppliers who rely on tariff-affected inputs.

What Canadian products are affected by tariffs?

Steel, aluminum, and copper products currently face sectoral tariffs of 25% and 10% to 50% respectively. Additionally, as of September 8, 2026, Canadian importers face counter-tariffs (15%, 25%, and 50%) on U.S. goods including dairy, agricultural equipment, steel, wood, paper, textiles, plastics, and electronics.

Can Canadian businesses get refunds for US tariffs?

Yes, if you paid IEEPA tariffs on goods entering the U.S. before 24 February 2026, you can file a refund claim through CBP's ACE portal. You'll need your entry summaries, proof of payment, and a U.S. bank account to receive the funds; processing takes 60 to 90 days.

What is CUSMA and does it protect against tariffs?

CUSMA, also called Accord Canada-États-Unis-Mexique (ACEUM) in French, is the trade agreement between Canada, the United States, and Mexico. It offers preferential tariff rates for goods that meet its rules of origin, but it doesn't provide blanket protection against all tariffs, particularly the sectoral duties on steel, aluminum, and copper.

What government support is available for tariff-affected businesses?

The CBSA offers the Duties Relief Program and the Duty Drawback Program to help businesses reduce or recover customs duties. The BDC and EDC provide financing and insurance for businesses dealing with trade disruptions, including working capital loans and export credit insurance.