US President Donald Trump is pressing forward with his plans for 25% tariffs on Canadian goods entering the United States, and this heralds a new era of uncertainty, adversity and doubt for many Canadian business owners. There is no simple solution to this issue, and Canadian Prime Minister Justin Trudeau has already spoken of retaliatory tariffs and energy cut-offs being enacted in a bid to restore the previously healthy trade agreement between the two countries.
These tariffs could lead to economic problems, inflation rises and potentially even job losses on both sides of the border. For franchises operating in our fine country, the message is clear: these tariffs are happening, and there is nothing that we can do to stop them. Instead, we must pursue other avenues to remain viable, profitable and thriving.
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Areas you should focus on now:
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Your supply chain
If you import goods from America, you will need to factor in a 25% increase in the cost of these goods. This may render your existing supply chain unaffordable. If that happens, what are your alternatives? Can you source the goods you need via the domestic market or from another, more reliable overseas source? Can you modify your offering to eliminate products that are troublesome to source, or will this have a catastrophic impact on your business? You should start investigating alternative supply chains now, particularly if contract break clauses require a notice period to enact.
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Communication
Your franchisor will take the lead on public communications, and it is essential that you follow their lead. They will have sought legal clarification and should be able to brief with confidence on any measures that are being implemented to safeguard the viability of the brand and its interactions with the US market. It is essential that you do not go off-script in your communications, as doing so could threaten the integrity of your brand's messaging.
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Legal factors
Any major changes to your business driven by external market forces could have legal implications, so it is important that you consider what legal support you have and may need over the coming weeks and months as you evolve your offering and remain competitive in your local market. Your franchisor should be able to advise you on what legal support you are entitled to through your franchise agreement with them. However, if your specific territory is likely to face a different threat than the brand as a whole, you may wish to seek specific legal advice from a qualified lawyer on your own specific circumstances. Do not take any action that could have legal consequences without first seeking professional advice.
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We will continue to discuss the trade tariffs in future posts as the situation evolves and clarity is reached.
