Price increases, new partners on the table as Canadian businesses prepare for tariffs

Jessica Miao is co-founder of Apricotton, a Toronto-based company making bras that grow as their tween and teen wearers develop.

TORONTO — Jessica Miao has been stressed out since November, when U.S. President Donald Trump first threatened to slap 25 per cent tariffs on Canadian goods.

The co-founder of Apricotton, a Toronto-based company making bras for teens, sees the promised tariffs as “a huge threat” to her business, which was due to expand deeper in the highly coveted U.S. market this year.

“The biggest concern that we have is just that (the tariffs) are going to make it more difficult to sell to American customers,” said Miao.

“They might be detracted by the higher prices that they will have to pay if we don’t absorb any of the tariff costs.”

Trump has teased the tariffs could arrive Saturday but has also given U.S. officials until April to consider the matter. He has yet to reveal what industries he may target.

The lack of clarity has left Canadian businesses unsure of what to prepare for and how quickly, but many say they’re not leaving anything to chance.

They have drawn up plans they’re prepared to use to protect themselves — no matter Trump’s whims.

Their readiness has been obvious to Kinaxis — an Ottawa-based company that sells software to businesses including Unilever, Procter & Gamble, Ford and Subaru — as many firms use the software to organize their supply chains and forecast how they will be impacted by future economic, trade and supplier changes.

“The volume of scenarios that are being run the week of Jan. 20 and a few weeks before are at the same level as the scenarios people were creating in the early days of COVID,” said Mark Morgan, Kinaxis’s president of global commercial operations.

“That’s because companies are trying to simulate, ‘OK, what are my options?’”

This kind of “what if planning” has included companies investigating whether they can source products from other countries or wherever they’re headquartered, along with looking at alternative travel routes and pricing that takes tariffs into account.

Kinaxis says it has been most pronounced in the automotive, chemical, oil and gas, and food and consumer goods industries.

Charlene Li is among the Canadian food business owners in preparation mode because she expects tariffs would have a “big impact” on her alcohol-infused popcorn company, Eatable.

The Vaughan, Ont.-based company has been selling to U.S. customers since its inception six years ago, but tariffs would likely make the cost of shipping orders over the border much more expensive.

To avoid some of that cost, Li is considering finding partners in the U.S. who could produce some of the popcorn there and ship it out to American customers.

That idea would help Eatable avoid tariffs, but there are trade-offs.

“Certain ingredients, for example, sugar, actually cost less for us to purchase here in Canada than in the U.S.,” Li said.

Because Eatable won’t have U.S. production up and running soon, she said the company will likely also look at its pricing and margins.

The company may resort to a price increase on some flavours, consider passing off some logistics costs to buyers or changing the thresholds they had for free shipping or discounted deliveries.

Miao has also been thinking about pricing.

Apricotton charges U.S. customers more than Canadians to offset exchange rates, but might stomach some of the tariff costs if American consumers appear more hesitant to buy.

She is also considering onboarding a U.S. fulfilment site or changing how her products ship to customers.

Apricotton bras are designed in Canada, but made in China, where Trump has also floated 60 per cent tariffs.

“Because the China tariffs right now are also up in the air, we might have to reroute the product to an intermediary country,” Miao said.

Despite the uncertainty, she was committed to ensuring tariffs don’t upend Apricotton’s U.S. ambitions.

“We know that the U.S. is a 10 times bigger market than Canada, so we still want to expand there,” she said.

This report by The Canadian Press was first published Jan. 31, 2025.

Tara Deschamps, The Canadian Press