Entrepreneurs Scramble to Adapt Amid Tariff Confusion and Supply Chain Disruptions
For Canadian startups, today—dubbed Liberation Day—feels anything but liberating. Instead of celebrating, founders are holding their breath, waiting to see what tariffs will hit next.
Over the last three months, businesses have been caught in a never-ending guessing game as the U.S. administration flips back and forth on trade policies. First, President Donald Trump threatened a 25% tariff on Canadian imports. Then, he paused it, only to later impose duties on Canadian steel and aluminum. Now, yet again, tariffs tied to the Canada-U.S.-Mexico Agreement (CUSMA)—a deal Trump himself negotiated—are hanging in limbo.
And on Wednesday, the U.S. is expected to drop the hammer again, imposing up to 25% tariffs on more Canadian goods. But the biggest challenge for founders? They have no idea what’s coming next.
Nothing hurts business more than ‘wait and see’.
Jean-Simon Fortin, CEO of Paperplane Therapeutics
How the Trade War Is Disrupting Startups
If you talk to Canadian entrepreneurs, they’ll tell you the same thing: this trade war is exhausting.
A survey by MaRS and Communitech found that over 75% of startups have been affected, either directly or indirectly. And it’s not just an inconvenience—11% of them are considering layoffs because of it.
For companies like Montréal-based Paperplane Therapeutics, which imports U.S. hardware to install its VR software, every change in tariffs throws their supply chain into chaos.
We’re spending more time trying to figure out what might happen than actually growing our business. It’s a massive time and resource drain.
Jean-Simon Fortin, CEO of Paperplane Therapeutics
For Josh Ogden, CEO of AVSS, a startup that builds safety components for drones, the constant shifts in tariffs mean pricing is all over the place.
We’re wasting time recalculating our costs multiple times a week. To stay competitive, we have to eat the tariff costs—and that’s not sustainable.
Josh Ogden, CEO of AVSS
And for startups already operating on razor-thin margins, currency swings are adding fuel to the fire. Sweat Free Telecom, an early-stage telecom company, earns revenue in Canadian dollars (CAD) but pays expenses in U.S. dollars (USD). Every time the CAD dips, they lose even more money.
Hard Choices: Layoffs, Fundraising, and Survival Mode
For some founders, even meticulous planning isn’t enough.
On The BetaKit Podcast, SRTX CEO Katherine Homuth advised startups to have contingency plans “A through D”—but even that couldn’t save her company from the trade war’s impact.
Her startup, which manufactures Sheertex tights in Canada, was about to get hit with up to 41% in tariffs. The only way to keep the company afloat? Temporarily laying off 40% of her staff.
Homuth also had to fast-track a critical funding round, but there was a catch—as a condition of the deal, she had to step down as CEO.
The Government’s Response
To help businesses survive, the Canadian government has rolled out a $6 billion support package. While many founders appreciate the effort, others say it’s not enough.
Instead of just aid, startups are calling for:
- More funding for business support programs
- Increased government procurement of Canadian-made products
- Trade diversification to reduce reliance on the U.S.
The Council of Canadian Innovators (CCI) has been pushing for procurement reform long before the trade war began. They believe Canada needs to prioritize its startups, especially now.
We always thought being close to the U.S. was our biggest strength. Now, it feels like our biggest risk.
Benjamin Bergen, Executive Director, CCI
What’s Next?
As tariffs shift yet again, one thing is clear: Canadian startups can’t afford to sit and wait.
Whether it’s redesigning supply chains, navigating currency swings, or shifting focus to other markets, founders are having to rethink their entire approach to doing business.
But the biggest question remains: How much longer will they have to play this guessing game?
