The economic ripple effects of the United States’ (US) ongoing global tariff war are clouding the sales outlook for Canadian tech companies with international customers.
The US economy contracted by 0.3 percent in the first quarter of this year, its worst performance since early 2022. The International Monetary Fund said it expects “sluggish growth” for the rest of 2025 as economists anticipate further negative impacts of US President Donald Trump’s widespread tariffs. Economists have connected the economic slowdown and potential recession to US trade policy uncertainty and declining consumer confidence.
“As a company, it’s really hard to shift gears and sell to somewhere else.”
Since February, many Canadian tech companies have seen their costs rise due to tariffs and associated uncertainty. Now, the resulting economic downturn is slowing sales for companies that indirectly sell into US markets, including software firms whose products are not directly subject to tariffs.
Mississauga-based SOTI, which sells software for enterprises to manage mobile devices like scanners and kiosks, has seen shrinking business opportunities as a result. With 17,000 clients worldwide, SOTI CEO Carl Rodrigues knows his company isn’t alone.
“If anybody tells you that they’re not affected by the tariffs, and they’re a decent-sized company, they don’t know what’s going on in their company,” Rodrigues told BetaKit.
At SOTI, Rodrigues said deals with US companies, which make up 45 percent of its business, are being postponed. The tech firm, which has been profitable for 25 years, is anticipating a downturn in the coming quarters. Rodrigues explained that US companies that buy products from China have had their costs go up due to 145-percent tariffs (which have now been temporarily slashed). Facing higher costs and tightening markets, these client companies have less cash to spend on other products, including SOTI’s.
SOTI isn’t the only Canadian tech company feeling the pinch. E-commerce giants Shopify and Lightspeed have indicated in recent forecasts that tariff-related uncertainty is impacting future outlooks. Both companies sell to US and global merchants.
Since the tariff threat emerged, business leaders and policymakers have touted diversifying a client base away from US customers. The federal government announced a $5-billion aid program through Export Development Canada, which includes financing to help businesses increase capacity for trade in different markets or acquire foreign companies. The Québec government also allocated funds in its latest budget toward helping businesses diversify their export markets.
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But the American economic downturn is metastasizing to include non-US clients who themselves deal with the US. Rodrigues referenced a German car manufacturer that is a SOTI client selling into the US. The company sources parts from China, leading to tariff-related higher up-front costs and less to spend on services such as SOTI’s.
“As a company, it’s really hard to shift gears and sell to somewhere else,” Rodrigues said. “If you’re a global company, you’ve already explored selling into every key market in the world.”
Currently bringing in more than $300 million in annual recurring revenue, the CEO noted his company is getting more aggressive with its sales process, flying out to connect potential international customers with training sessions. Incentivizing big clients to speak to their existing partners about SOTI’s product is another way the company is hoping to boost its sales pipeline.
Rodrigues encouraged Canadian companies to be innovative in how they sell their products. Shifting strategies and “not sitting on your hands” is key to navigating the fallout of trade policy that could change on a whim, he said.
“You have got to be innovative in how you sell and innovative in how you adjust,” Rodrigues said. “Creative companies figure it out.”
With files from Douglas Soltys. Feature image courtesy SOTI via YouTube.