Just before the weekend, we released our take on how the new U.S. tariffs would affect Canadian businesses.
And just like that, we’re in a trade war with the U.S. The cost of living for Canadians is about to skyrocket and Canadian businesses are facing increased challenges when it comes to sourcing goods and materials from our southern neighbor. While some companies might be looking to weather the storm by continuing business as usual, others are beginning to explore the idea of reducing their dependency on U.S. suppliers.
Although this feels like a challenging time, it could also be an opportunity to rethink our supply chains and look closer to home for solutions. Switching to Canadian suppliers not only reduces exposure to rising tariffs, but it also brings a range of other advantages that can benefit Canadian companies in the long run.
Not to mention, if you’re currently in Ontario – you might lose access to some U.S. goods altogether. Effective Tuesday, American-made alcohol will be pulled from LCBO shelves.
Let’s explore why now could be the right time for Canadian businesses to pivot toward domestic suppliers and how they can make this transition effectively.
1. Avoid tariff-driven price increases
The most obvious reason for Canadian businesses to consider switching to domestic suppliers is to sidestep the rising costs associated with U.S. tariffs. As the U.S. continues to impose tariffs on a number of items – ranging from raw materials like steel and aluminum to agricultural products and finished goods – Canadian companies that rely on U.S. suppliers are being hit with higher costs. The result? Higher prices for customers which can reduce the number of units sold or smaller margins for Canadian businesses, making it harder to impact the bottom line.
By shifting to Canadian suppliers, businesses can avoid these added tariffs, keeping their production costs stable. For example, a Canadian manufacturer currently importing steel from the U.S. could instead source it from Canadian mills, thus avoiding the U.S. tariff and potentially securing better pricing in the process.
2. Enhance supply chain resilience
A key benefit of sourcing from Canadian suppliers is the added resilience it brings to your supply chain. As the new tariffs continue to unfold, we’re now facing the reality that U.S. tariffs are unpredictable, and any changes in U.S. trade policy can throw a wrench into supply chain planning.
The upside – using Canadian suppliers will help businesses minimize the risk of sudden tariff changes affecting their ability to obtain key materials and products. This can be especially important for industries that rely on just-in-time inventory systems, where delays in receiving supplies can disrupt production schedules.
Supply chain disruptions due to tariff-related bottlenecks are far less likely when goods are sourced domestically. Shorter shipping times and fewer regulatory hurdles could lead to more efficient and reliable deliveries.
3. Support the local economy
Switching to Canadian suppliers doesn’t just benefit your business – it also contributes to the growth and stability of the Canadian economy. By keeping money within Canada and supporting local businesses, you help create jobs, foster innovation, and promote economic growth. In a time when global supply chains are being tested, there’s a renewed focus on "buying local," which can boost both national and regional economies.
Hot tip: consumers are also increasingly looking for Canadian-made products, driven by a growing preference for supporting homegrown companies. Many Canadians see it as a patriotic move to buy products that are made locally, and this could provide a competitive edge for businesses that can market their Canadian-made credentials.
Psssst, Humi has and always will support Canadian businesses (and we’re Canadian too!).
“It was very intuitive, Canadian, and the user interface was awesome. I found the support was great too because when we transitioned over, we had HR information that we pulled from BambooHR that we were trying to plug into Humi, and then we had payroll information coming in from Ceridian…They were super helpful during the implementation and even to this day.” - Zohair, Director of Operations at Outside Looking In
4. Reduce shipping costs and lead times
Beyond tariffs, another downside of relying on U.S. suppliers is the higher cost of international shipping and the associated lead times. Cross-border logistics are often more complex and expensive, involving additional paperwork, customs duties, and potential delays at the border. We’ve all felt it – watching the packages we order end up at customs and delayed for weeks (sometimes even months). How painful!
Switching to Canadian suppliers could significantly reduce these costs, making it easier and faster to get the products you need. Domestic shipping can be less expensive than international freight, and lead times for Canadian suppliers are often shorter than those from U.S. counterparts. This improvement in logistics efficiency could help Canadian businesses stay competitive, especially in industries where speed-to-market is crucial.
5. Increase flexibility and customization
In many cases, Canadian suppliers may be more flexible and able to offer more customized solutions than larger U.S. suppliers. As the global economy becomes more interconnected, many companies are looking for ways to offer unique products or services tailored to their customer base. Domestic suppliers often have a better understanding of local market demands and preferences and can work with Canadian businesses to create specialized products more efficiently.
Some food for thought – when you’re working with software, you’re forced to enter a zip code instead of a postal code but, zip codes don’t exist here in Canada. How annoying is that? We all know this and that’s why our product is built for you, Canadian businesses. But let’s take it to the next level; getting charged in USD for a product is about to get a lot more expensive. Switch to Humi, you’ll get better value and none of the sticker shock. Your finance team and budget owners will love you.
How to make the transition
Making the shift to Canadian suppliers doesn’t happen overnight. Here are a few steps businesses can take to make the transition:
- Evaluate your current supply chain and tools: Identify key products or materials you’re sourcing from the U.S. and assess whether viable Canadian alternatives exist. Consider factors like price, quality, and delivery times. In the employment platform space – if you’re using BambooHR, ADP, or another competitor, re-evaluate how much more you’re already paying for a software that isn’t designed and built for your business.
- Research local suppliers: Look for Canadian suppliers with a proven track record of reliability, quality, and cost-effectiveness. Consider reaching out to industry groups or trade associations to get recommendations on trusted local suppliers.
- Negotiate favorable terms: When switching suppliers, take the opportunity to renegotiate terms of service, payment schedules, and delivery conditions to ensure your new relationships work in your favor.
- Plan for the long-term: While immediate cost savings from reduced tariffs can be enticing, consider how a switch to Canadian suppliers can benefit your business strategically in the future.
What’s next?
In light of new U.S. tariffs, Canadian businesses face a unique opportunity to strengthen existing operations by shifting focus toward domestic suppliers. Not only does this move help mitigate the rising costs of U.S. tariffs, but it also brings advantages such as enhanced supply chain resilience, reduced shipping costs, and support for the local economy. By sourcing more locally, Canadian businesses can become more agile, sustainable, and competitive. This sets us up for long-term success in an increasingly complex global market.Let’s build stronger, more cost-effective, and resilient supply chains by turning to trusted suppliers right here at home. Get started with Canada’s only employment platform for payroll, HR, and benefits: from now until February 15, 2025, mention this blog and get 2 months of Humi for free. Book a demo today.
