“Changes nothing”: Canadian tech still in limbo as country escapes worst of US tariff wave

PM Mark Carney: US has signalled additional tariffs on pharmaceuticals, semiconductors.

Canada appears to have escaped the worst of the United States’ (US) latest and most dramatic round of tariffs yet, but Canadian entrepreneurs are still feeling the impact of ongoing trade uncertainty. 

US President Donald Trump announced what he called “reciprocal” tariffs on more than 60 countries in front of a crowd at the White House Rose Garden this evening, but Canada and Mexico were notably absent from the list.   

The sweeping tariffs are on all imports to the US, except those compliant with the Canada-United States-Mexico Agreement (CUSMA) free trade treaty, according to a White House fact sheet. Non-compliant Canadian goods will continue to be charged at a 25-percent rate while non-compliant energy and potash will see a 10-percent tariff. 

In other words, these tariffs are a continuation of what the US instituted toward Canada last month, which the US portrayed as part of an effort to curb perceived cross-border fentanyl smuggling. These tariffs initially affected all imported Canadian goods, but after negotiations, were revised to exclude CUSMA-compliant goods. That exclusion was set to expire today, but is now continuing. 

“Canadian businesses can breathe a little easier for now.”

Startup Canada

Council of Canadian Innovators (CCI) president Ben Bergen told BetaKit that Trump’s announcement “changes nothing” for Canada’s fundamental trade situation with the US. Bergen added that Canada’s trade strategy has bet on stability with the US for too long, and that after months of trade turbulence, Canada needs a “bold, modern economic strategy.” 

“What’s needed now is a focused, forward-looking industrial policy: one that supports Canadian firms, drives investment toward high-value sectors, and deploys procurement as a strategic tool,” Bergen said.

Startup Canada posted on LinkedIn that while the new tariffs are impacting global trade, “Canadian businesses can breathe a little easier for now.”

The fact sheet goes on to say that, in the event the current tariff orders against Canada are terminated, CUSMA-compliant goods would “continue to receive preferential treatment,” while non-CUSMA compliant goods would be subject to a 12-percent tariff.

Trump also announced that all foreign automobiles imported into the US would be subject to a 25-percent tariff, though it is currently unclear how the renewed exemption for CUSMA-compliant goods will impact this. 

Following Trump’s announcement, Prime Minister Mark Carney told reporters that Trump’s measures are “going to fundamentally change the international trading system,” but that a number of important elements of the Canada-US relationship were preserved despite many tariffs remaining in place.

“As of this evening, the tariffs on automobiles will enter into force, and the US has signalled that there will be additional tariffs in so-called strategic sectors: pharmaceuticals, lumber, and semiconductors,” Carney said. “We are going to fight these tariffs with countermeasures, we are going to protect our workers, and we are going to build the strongest economy in the G7.”

Uncertainty continues for entrepreneurs

While Canada seems to have escaped the worst of the action, the ongoing uncertainty was already making it harder to plan and adding costs for entrepreneurs, founders told BetaKit. More than three-quarters of Canadian startups said they were impacted directly or indirectly by the tariffs, according to a survey released last week from tech hubs MaRS and Communitech. Forty-one percent said their 2025 revenue could drop, and 11 percent said they planned to cut staff due to the trade war.

The impacts of the trade war saw Montréal-based payments company Lightspeed Commerce pull back its revenue outlook for its 2025 fiscal year from a 20-percent to an 18-percent year-over-year gain, citing “several macroeconomic conditions” that had deteriorated. CEO Dax Dasilva told BetaKit that tariffs and trade wars “certainly play a role” in creating uncertainty in the market.

The top concerns of startups surveyed by MaRS and Communitech were raising capital in this environment, go-to-market execution, and accessing customers. Among their demands were increased funding for business support programs and increased government procurement of Canadian products.

RELATED: Canadian founders face rising costs, wasted time ahead of trade war escalation

At the announcement, Trump still voiced his displeasure with Canada’s supply management system, a national policy framework that controls the supply of agricultural products. Carney said earlier today that supply management was “off the table” in any future negotiation with the US.  

Trump claimed the broadly applied tariffs, which he called “reciprocal,” were individually calculated to determine the monetary and non-monetary measures that other countries imposed on US imports, then cut in half to “be kind.” Affected countries include China, with a tariff of 34 percent, the United Kingdom at 10 percent, and India at 26 percent. 

The White House has been calling today “Liberation Day” in the weeks leading up to this latest round of so-called “reciprocal” tariffs against target countries, whether “friend or foe,” —all with the aim to “Make America Wealthy Again.” Trump said the goal of the tariffs is to bring the manufacturing of goods like automobiles and semiconductors back to the US. 

Feature image courtesy Daniel Torok via Wikimedia Commons.

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