The owner of an Ontario-based cosmetic company says U.S. President Donald Trump’s newest tariff threat is causing a new round of “fear” and “confusion” for small businesses across Canada who are already dealing with significant economic headwinds. Trump announced earlier this week that come Aug. 19, the U.S. will charge a 50 per cent tariff on a wide range of Canadian goods, including some that are covered under the countries’ free trade agreement. Officials in the U.S. have cited unfair trade practices, including provincial bans on U.S. booze, as justification for the move. “This number (50 per cent) is obviously far more concerning than what we heard in the past,” said Jenn Harper, the founder and CEO of Cheekbone Beauty, which is headquartered in St. Catharines, Ont. and is one of the first Canadian Indigenous-owned and founded cosmetics companies. Cheekbone Beauty supplies products to Sephora in Canada and JCPenney in the United States. Harper noted that the U.S. market represents about 20 per cent of the business, which has four full-time employees. “As we saw last year, there were so many moving parts during this time that it was truly hard for an operator to actually make a decision because things were just constantly moving and changing,” she told CP24.com in an interview this week. “When you felt like you had your footing, of course, something else would happen.” She noted that in an effort to address a desire from customers to have more products made here in Canada, last year the company shifted some of its manufacturing from Italy to a local manufacturer. “Bringing them here to make them in Canada so that our Canadian consumer would be happy and now (we) understand that it will be not great for our U.S.-based customers because of this,” she said. She said the company has absorbed the cost of tariffs for U.S. customers in the past. “Obviously that cuts into our margin... but we have customers that we’re trying to service all across North America and we didn’t want this to impact them,” she said. ‘Deeply, deeply troubling’ Dan Kelly, the president and CEO of the Canadian Federation of Independent Business (CFIB), said if this tariff materializes, it could prove fatal for some companies. “It’s fairly broad (and) would affect a whole bunch of businesses, in particular, a whole bunch of small and medium sized companies…. They have fewer options in terms of just shifting trade from one person or one place to the next,” Kelly told CP24.com. “For some businesses, you know a 50 per cent tariff on their goods on exports to the United States would essentially make their business defunct. They would not make sales to the U.S. and if that’s a critical market for you, it could be deeply, deeply troubling.” The lengthy list of goods ranges from wine to hockey sticks to cement. Trump is using Section 338 of the Tariff Act of 1930, a Great Depression-era legal tool that has never before been used in the United States. “Over the last year-and-a-half, we’ve seen that only one in every 10 threats to tariff goods from Canada actually materializes so there are a lot more threats to tariffs than there actually are tariffs on Canadian goods or services at this moment,” Kelly noted. “But we can’t discount that either. This is a significant one, 50 per cent, a very high level, and its application on a whole host of goods that are right now tariff-free.” ‘A pathway out of this mess’ Trump’s threat comes as negotiations on the trilateral trade pact between Canada, the United States, and Mexico continue. Kelly said the threat does shed light on “a potential pathway out of this mess.” “The fact that they have highlighted three areas in the trading relationship: dairy, autos, and liquor, that is a narrower list than they’ve had in the past,” he said. “It does suggest that perhaps if there are some changes, we may be able to get a deal.” He noted that even with dairy, a “critical issue for Canada,” there seems to be a path forward. “The complaint from the U.S. is less about supply management more broadly and more how much U.S. dairy producers are able to send into Canada compared to the EU,” Kelly said. “So maybe there is a pathway that would allow the country to negotiate a slightly higher allocation for U.S. producers while still protecting the guts of the supply managed agreement.” Kelly said it is hard to know exactly how the ongoing push to “buy Canadian” will play out if these tariffs go forward next month. “There’s a variety of food products on this list, some manufactured goods, on this list. Some of them though are more industrial in nature. So how much of a buy Canadian philosophy is going to help out, it’s hard to see,” he said. Harper said last year in February and March, when tariff talk began to propel consumers toward buying local, her company saw a significant, albeit temporary, boost in Canadian customers. “We’ve been grateful because we have truly an incredibly loyal audience that I think loves our brand beyond our products,” she said. “The only thing that I know for 100 per cent certain is that Canadian entrepreneurs, we’re resilient and we’ve figured it out before and we’ll figure it out again.” With files from The Canadian Press
