Wood: Tariffs could repeat damage pandemic did to Ottawa small businesses

Five years ago, small businesses in Ottawa and across Canada faced an economic crisis as the pandemic took hold. Many contended with lockdowns and suffered significant revenue losses, and people were laid off from their jobs. These businesses also faced supply-chain issues, operational challenges and increased debt.

This led to a “second pandemic,” which is the mental-health challenge that so many Canadians are facing right now as these businesses continue to try to recover.

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Moving the clock forward by five years, and with the tariff war U.S. President Donald Trump began on March 4, we are potentially facing a similar outcome to what the pandemic did to small businesses.

Visiting the LCBO Tuesday, I saw that all of the American bourbon had already been removed from the shelves. While I do understand Ontario’s approach to this, the impact of the tariffs will pose new challenges to restaurants in our community. Many have a wine and spirits menu heavily centred on American products, and with Ontario pulling this inventory off the shelf, establishments will need to revamp their menus quickly.

A restaurant owner friend told me they are currently concerned about the escalating costs of produce. Of course, this will mean having to charge customers a higher price to combat increases and help keep businesses open.

With the rising cost of consumer products and customer purchases of American-made products decreasing, some retailers may have to reduce staffing in their stores. This harkens back to the challenges small businesses faced five years ago, when, through no fault of their own, Ottawa small businesses had to lay off countless employees to continue to keep themselves sustainable with much-reduced revenue. This could also impact people currently looking for a job.

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Some local businesses did well during the pandemic. But some companies that “pivoted” during the pandemic and started exporting to the United States will feel the impacts of the tariffs and will potentially see fewer U.S. sales. These Ottawa-based businesses will be highly susceptible to tariff impacts and again will have to restructure their business model by seeking out new supply chains.

The trucking sector right now is in jeopardy, with the possibility of fewer American companies ordering Canadian products that need to be shipped across the border. As he Canadian Trucking Alliance website notes, “Trucking moves most (70 per cent by value) of Canada-US trade. In March 2024, the total value of Canada-US trade moved by all four transport modes totalled $77 billion.”

Again, this could lead to more layoffs across Canada — and here in the nation’s capital. Shipping costs are all part of the products we purchase, and we could all see higher prices on literally everything as the trucking companies try to offset their losses.

When people start a business, they typically have a business plan prepared to help ensure growth. There is an expression in the business world: “Fail to plan, plan to fail.” But small-business owners won’t have had a plan in place to combat these tariffs with our largest trading partner, and the economic uncertainty this is causing in Ottawa will lead to them pushing pause on new staff and the overall growth of their business.

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Five years after the start of the pandemic and the economic impacts it had on so many, it is important to always remember that many of the small businesses in our community are family-owned and operated. The income that these businesses generate allows the owners and their employees to house and feed themselves and provide for their children.

Let’s support and wish all local businesses our best during this vicious cycle of potential economic downturn.

Michael Wood is a professor at Algonquin College in the School of Business and Hospitality, and a senior consultant at Ottawa Consultants.

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