Tariffs have become a pressing concern for small businesses, squeezing profit margins, disrupting supply chains, and forcing difficult decisions about pricing and operations.
Merchant Growth, a digital financing and growth solution for small businesses, recently surveyed over 200 business owners to understand how they’re navigating these challenges.
In this Q&A, Joe Cote, Chief Growth Officer and a seasoned finance expert, shares key findings from the survey and offers actionable advice on how small businesses can adapt and thrive in this turbulent economic environment.
Tell us about Merchant Growth.
JC: Merchant Growth, a leading Canadian digital financing and growth solution for small businesses, aims to bridge the gap in support for small businesses beyond traditional banks. We leverage innovative technology and personalized customer service to support entrepreneurs across various industries in Canada, offering fast and flexible small business financing solutions.
What are the primary challenges small businesses face in navigating the current economic uncertainty, particularly with tariffs impacting Canadian businesses?
JC: Small businesses are trying to keep their costs under control and stay profitable, and tariffs just make that harder. About 64% of business owners who are bracing for impact say they’re worried about the rising cost of goods, which usually means they have to either eat the cost or pass it on to customers. Neither option is great. What’s even more concerning is that about half (51%) of the small business owners we surveyed are expecting a 10 to 25% hit on their revenue, and about 1 in 5 are bracing for losses beyond that. So it’s not just about higher prices, it’s about whether businesses can stay competitive without losing customers or cutting too deep into their margins.
So, what can a small business actually do in this situation?
JC: First is to revisit your supply chain. If you’re relying heavily on one vendor or region, it might be time to look for alternatives. Second, get lean on operations, figure out where you can tighten things without sacrificing quality. And third, keep your capital options open. Access to fast, flexible funding can mean the difference between acting strategically and just treading water.
What role do you believe the government should play in supporting small businesses affected by tariffs?
JC: The government should offer targeted financial support, such as immediate tax relief (not deferrals), and facilitate trade agreements domestically and abroad that reduce tariff burdens. Additionally, the government needs to focus on capital gains reform to spur domestic and foreign investment into Canadian businesses.
Your recent survey showed some pretty strong reactions, some businesses expecting revenue hits of 25% or more. Were you surprised by that?
JC: It was definitely notable, but not entirely unexpected. The data reflected what we’ve been hearing anecdotally from business owners for a while now. For many small businesses, profit margins are already quite slim, so even a 10–15% shift in costs or revenue can have a meaningful impact. A portion of respondents expecting a 25% or more revenue hit is certainly significant, and it highlights the need for careful planning and support. That’s why we’re continuing to focus on practical solutions and tools to help businesses stay resilient.
What are some common misconceptions about how tariffs affect small businesses, and how can these be addressed?
JC: A common misconception is that tariffs only affect businesses directly importing goods. However, indirect impacts, such as increased costs throughout the supply chain, are significant. Educating businesses about these broader effects can help them prepare more effectively.
What advice would you give to small businesses that believe they will not be impacted by tariffs?
JC: Even if a business believes it won’t be directly impacted, it’s crucial to monitor supply chain partners and competitors, as indirect effects can still occur. Staying vigilant and informed so businesses can adapt quickly. At Merchant Growth, we’re committed to supporting businesses with flexible financial solutions to help them explore ways to adapt and shift strategies.
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