‘Economic chemotherapy’: Business groups wary of counter-tariffs, federal aid package

Despite Ottawa unveiling an aid package for Canadian businesses affected by the trade war with the United States, industry leaders say the measures do not go far enough to help them stay afloat, especially in the wake of Canada’s new counter-tariffs.

The federal government announced a $7.5-billion package on Tuesday, including new loan programs for businesses and more flexibility for workers to apply for employment insurance.

The relief effort comes in tandem with a suite of counter-tariffs that will take effect Sept. 8 in response to President Donald Trump’s new 50 per cent tariffs on $27.6 billion of Canadian goods.

Ottawa is raising tariffs on American steel and aluminum products from 25 to 50 per cent, while imposing 50 per cent tariffs on clothing and apparel and a 25 per cent tariff on appliances, dairy products, seafood, and certain steel and aluminum derivatives products. There is also a 15 per cent tariff on a small list of items including hand tools, air conditioners and forklifts.

Canadian Federation of Independent Business president Dan Kelly acknowledged that the retaliatory levies serve a geopolitical purpose, but said he worries about the consequences local firms will face, especially if the trade war continues to escalate.

“Counter-tariffs are economic chemotherapy. You take the poison yourself to fight a larger battle that you’re in but the treatment almost kills you,” Kelly said in an interview.

“If your impact is going to be a 25-cent increase on a jar of peanut butter, you’re saying, ‘Yeah, let’s go to the wall.’ If your impact is losing your business, and I’ve got many that are in that category, you have a different reaction to counter-tariffs.”

The sentiment was echoed by Dennis Darby, president and CEO of Canadian Manufacturers and Exporters, who said retaliatory tariffs “pose significant risks,” particularly for smaller businesses facing higher input costs and limited ability to shift their supply chains.

“Canada has every right to respond to unjustified U.S. tariffs. However, counter-tariffs can also increase costs for Canadian manufacturers that depend on U.S. inputs,” he said in a statement.

“The government must continue providing timely tariff remission where essential goods cannot be sourced competitively or efficiently in Canada.”

Darby said his industry association appreciates new measures announced to support workers and businesses, but noted governments across Canada need to do more.

“We need a stronger push to buy Canadian, reduce regulatory barriers that hold back trade within Canada, and accelerate investments in productivity, technology adoption, and industrial competitiveness so Canadian companies can win business and keep good jobs here at home,” he said.

The federal government’s aid package includes $1.5 billion to be delivered to small- and medium-sized enterprises by Canada’s regional development agencies. There is also a new $500-million liquidity stream under a Business Development Bank of Canada program aimed at helping businesses manage immediate cash-flow pressures, along with targeted programs for the forestry, steel and aluminum sectors.

Meanwhile, Ottawa said it would lower the minimum revenue threshold that businesses must meet to apply for the Business Development Bank of Canada’s tariff-related programs to $1 million, allowing greater access to the funds.

But any requirements around revenue levels and employee head counts will exclude most small businesses from receiving that aid, said Kelly, who doubted the support measures can be an adequate lifeline for his group’s members.

“While that’s a step in the right direction, why are we excluding very small businesses that are going to have an outsized impact of this tariff fight? To me, they’ve got to get rid of all of the thresholds,” he said.

“I worry that they’re basically just doubling down on the programs that were not working in the first place. They’re pumping more money into agencies that just don’t work for small business.”

The federal government said it would continue to assess its programs and policies to support businesses affected by the trade war, which would include expanding the availability of existing measures to newly hit sectors.

Candace Laing, president and CEO of the Canadian Chamber of Commerce, said it’s essential for the government to prioritize speed as it seeks to help businesses affected by the collapse of trade talks with the U.S.

“We understand the government’s urgency to deliver rapid, agile and simple relief measures, which is why we cannot let red tape get in the way of being effective,” Laing said in a statement, adding all stakeholders should be prepared for long-term pivots.

“We want to give business urgent relief and breathing space at this time, while they work to figure out the path ahead. So, we see that the intention of loans are helpful, but they can also be a monkey on the back when they come due. As this rolls out, we understand there will be improvements along the way, as we have seen from past iterations of government-led crisis management.”

Jay Goldberg, North American affairs manager for the Consumer Choice Center, said that while Canadians might support a strong response to Trump’s tariffs, the answer should not be a raft of new taxes on Canadian consumers.

“Canada’s politicians have been all over U.S. airwaves arguing that tariffs are taxes paid for by domestic consumers. They’re right in making that argument, which is precisely why it would be wrong to impose them here,” Goldberg said in a statement.

“It’s important for Canadians to remember that retaliatory tariffs are taxes paid by us, not Americans. Canadians are struggling right now with high food inflation and … making goods more expensive for consumers isn’t the right response to Trump imposing additional taxes on American consumers.”

This report by The Canadian Press was first published Aug. 25, 2026.

Sammy Hudes, The Canadian Press