Tariff threats are freezing big business and leaving small companies with no options
CBC
Millions of dollars and thousands of jobs are in flux for Canadian businesses, as constant changes to tariffs mean companies based in this country are either avoiding financial decisions or feel they are unable to make them.
From large multinationals to small outfits with less than a dozen employees, the repetitive cry of "uncertainty" is causing more than just confusion. It's influencing financial decisions for big players, and freezing smaller companies in their tracks.
For Kun Shoulder Rest, it's the latter. The company is globally known for the violin and viola ergonomic accessories it makes in, and exports from, Ottawa.
"If you don't play the violin, you will never have heard of a shoulder rest. If you do play the violin, you will know our brand," said Juliana Farha, one of the company's directors.
But despite its international profile, the company does not have the resources to simply pivot to new markets when faced with on-again, off-again tariffs on products sold in the United States.
"It's our biggest market and that represents 35 to 40 per cent of our global market," said Farha, who explained that the company relies on students, amateurs and younger violinists and violists to buy its product . A shoulder rest is typically bought once and kept for years, if not decades.
Essentially, the company cannot pivot every time tariff policies change to try and replace potential American customers. There aren't exactly millions of extra violinists in the rest of the world, and Kun has already expanded into international markets such as Europe.
"The feeling of recklessness of all of this has created tension and uncertainty for us," according to Farha, who is also concerned that some international competitors won't be facing the same tariffs as her Canadian company, making its products seem even less competitive.
In a scenario like this, business and economic experts say businesses may need to bite the bullet and either hope their customers will accept a higher price, or lose money themselves.
"Companies either have to say, 'We want to maintain our customer base, therefore we are going to absorb that additional cost,' or pass it on to their actual customers," said Charmaine Goddeeris, director of customs and international trade with consulting firm BDO Canada.
Goddeeris points out that many companies may need to determine whether they want to keep doing business in the United States at all.
"If yes, then you're going to have to come to the United States so you can solidify [being] made in America," she said, since such products ostensibly would not face tariffs when sold there.
That's not a decision a small business can make easily — or at all — without having to completely relocate. Not so much for larger companies, which may have the financial ability to split production between countries.
But larger corporations that could afford to spend the money are frozen these days, too.
