Let's be very specific. We're not speaking about Americans. We're talking specifically about Donald Trump and his administration. While he's threatened to impose tariffs on Canada since before his inauguration, the actuality of them being implemented was always something a little suspect due to the mercurial nature of this President. They're now here. And I'm not going to get into the nuances of these tariffs because that would just make this entry lengthier than it needs to be and to be quite honest, this isn't the platform for that discussion. Instead, I’d like to speak to the trepidation and the anxiety that small business owners are experiencing. There is hope.
Don’t get me wrong. I know that the coming days is going to hurt. A lot. I’m not trying to diminish the pain that we’re all about to experience and endure. But as with most things, I try to focus on the positives.
In Japanese, there is a phrase that is often used, ピンチはチャンス. The literal translation of this in English is ‘a pinch is a chance’. This means that whenever there is threat, there is also possibility of opportunity. Similarly, in Chinese, the phrase 危機 translates to ‘threat / opportunity’. With the threat of
these tariffs now a reality, there also means that there is opportunity.
Diversification
In my previous life, I worked with many overseas products manufacturers both large and small. Regardless of the size of these factories, there were some who would refuse to work with giants like Walmart. One of the reasons for this was because that working with these kinds of giants would mean that they would eat up a big chunk of their capacity. For smaller manufacturers, this might mean 80-90% of their capacity. This would mean that should they work with one of these giants, should the customer pull the plug, they would lose 80-90% of their business. This is an issue we have as Canadians, where roughly two-thirds of all our exports are going to our neighbours to the south. For some small business owners, this percentage is even higher.
Canada actually has free trade agreements (FTAs) with 51 countries. While these agreements might not be blanket FTAs for every industry, it does mean that we have more than the Americans that we can be working with. While margins may be lower sending products to other jurisdictions, it is definitely an avenue that we should be exploring.
Investment
This leads me to my 2nd point. This is also an opportunity for us to invest in ourselves. Per capita GDP has been on a rather steep decline since 2015. According to The Financial Post, per capita GDP has declined 3% since 2019. Some of this can be attributed to companies being able to find lower priced replacements for their team members rather than investing in their existing teams. Some of this can be attributed to increasing production using existing technologies rather than investing in new(er) technologies that might increase efficiency.
With these tariff threats, investing in our teams, and investing in the tools that allow our teams to be more productive, over the long run, will lead our companies to be more efficient, and better compete in the global market.
It’s difficult to stop production in order to replace systems when you’re making money. Since things might be slow for a little bit, this is a wonderful time to be able to invest in your company for future efficiencies and growth.
Shop Local
Since the start of the COVID pandemic, there has been a push to support local businesses. With these tariffs, this is more true than ever because local businesses need our help. But this isn’t just a retaliatory measure, but as a business, this also offers us opportunities for new offerings as well. As an example, if you’re a restaurant, and you usually purchase cola and soft drink products from the big brands, here’s now an opportunity to now offer a local cola in lieu of the traditional brands. Not only would you be supporting a local company, you would also be offering something new for your customers to try as well.
Recovery
Yes, we’re all going to be suffering some level of pain over the next little while (hopefully these tariffs don’t last very long), but by taking advantage of some of these opportunities, when those tariffs inevitably go away, your small business will be stronger than ever. If your volume sales to the United States was say $500,000 before, and you’re now doing business with say, Germany for $250,000. When these tariffs go away, and you re-engage with your American customers and clients for the same $500,000 and now you’re able to add your sales to Germany that you’ve now picked up, your revenue will be at $750,000. Isn’t that something to be celebrated?
If you take this opportunity to invest in your company for newer technologies and you’re able to increase efficiency and productivity, when trade normalises, you’ll not only see increased margins, but also be in a better position for growth moving forward.
Brand Strategy
While we’re all likely also looking at immediate measures within our marketing efforts, I implore small businesses to also take this opportunity to look at your brand strategy. We want to make sure that the way we react to an event (these tariffs or COVID as examples), we do so in a way that reflects our brand strategy. But more than that, I just talked about investing in your company. Investing in your brand strategy is equally as important (and I’d argue, more important) as you plan for the future with regard to Diversification, Investment, Buying Local, and Recovery. Making sure that your website, your marketing strategies, your team’s responses, making sure they are all reflective of your brand mission, strategy, and promise are vital in helping shorten that decision making process as you approach potential new customers and clients. Equipping your potential clients and customers with the ability to better verify that your business is the one that they want to work with is going to make the decision process easier.
The bottom line is, while there is definitely going to be some level of pain for both consumers and businesses alike in the coming days, weeks, and (god forbid) months, there are things that we can do to mitigate some of that turbulence, and help us to come out of this situation better, stronger, and healthier.
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