Toronto businesses concerned that U.S. tariffs will drive up costs

The newly imposed U.S. tariffs could significantly increase the cost of essential goods, including raw ingredients for food production and fabrics for clothing manufacturing. While large corporations may have the financial flexibility to absorb these rising expenses, small businesses—such as local bakeries and independent clothing stores—lack the same resources, making it harder to manage higher supply costs without passing them on to consumers.

Province of Canada, a Toronto-based apparel brand, is one example of a retailer bracing for tough times ahead. Although its products are solely made in Canada, the business relies heavily on the U.S. for specific items.

“We do make a lot of stuff with cotton, and cotton can’t be grown here. So we import that from the United States,” said Alli Piccininni, product and operations manager with Province of Canada.

“If the tariffs were to come into play, we would have to look at potential alternatives, which is a long process and can be difficult to source and make sure we’re keeping the same quality and integrity in our products.”

The silver lining in all of this, some Toronto business owners admit, is the recent increase in sales with customers wanting to shop local and support Canadian brands through uncertain times.

“Our sales have almost doubled in the past several weeks,” Piccinni said. “Usually, in February, it’s pretty quiet and kind of a reprieve from the holidays season, but this year, that wasn’t the case.”

Local bakery owner feeling the pressure

Just a few blocks away, local bakery Ampersand Bakehouse is also grappling with the rising costs brought on by the new tariffs.

Owner Stephanie Kaptein explains that key ingredients, such as flour, sugar, and butter, have become more expensive, straining her small business’s budget. She is now actively searching for alternative suppliers to keep costs down. However, if she cannot secure more affordable sources for these essential products, Kaptein warns that she will have no choice but to raise prices—something she hopes to avoid for the sake of her loyal customers.

“If the price of your raw goods goes up, I can’t cut back; it takes the same amount of time to make the cupcake,” said Kaptein. “I do everything to batch it and make it so that those costs are down, but at the end of the day, you can only absorb so much cost before you have to go under.”

Kaptein explains that she relies on imported ingredients for her baked goods, with many coming from the U.S. Additionally, she depends on American suppliers for certain essential items that are unavailable locally.

“A lot of time, there just aren’t those Canadian suppliers for things like party plates; you have to outsource that somewhere else,” she said. “So it’s really frustrating when you don’t have the Canadian option.”

Help is on the way

Relief is on the horizon for small businesses struggling with rising costs, as the federal government announced last week a more than $6 billion aid package aimed at helping companies impacted by the tariffs.

The initiative includes a range of financial support measures, such as grants, subsidies, and tax relief programs. As part of the package, $500 million will be allocated specifically for business loans, providing small businesses with much-needed access to capital to help offset increased expenses, secure alternative suppliers, and stabilize operations in the face of economic uncertainty.

“This support includes favourable loans between $100,000 and $2 million,” said federal Minister of Small Business Rechie Valdez. “These loans will be at a preferred interest rate of [Business Development Bank of Canada’s] base rate minus two per cent. This will reduce borrowing costs when businesses need it the most.”

Last week, U.S. President Donald Trump postponed 25 per cent tariffs on many imports from Mexico and some imports from Canada until April 2 amid widespread fears of the economic fallout from a broader trade war.

Ontario Premier Doug Ford said that starting Monday, the province will charge 25 per cent more for electricity shipped to 1.5 million Americans in response to Trump’s tariff plan. Ontario provides electricity to Minnesota, New York and Michigan.