Can Canada supply itself? Trade war forces businesses to find out

With no end in sight to the trade war between Canada and the U.S., some small and medium-sized businesses are looking for ways to move more of their production back home.

The Unscented Company, a Montreal-based home and body care business, stopped contracting the production of its soaps out to a Vermont company, instead bringing it north of the border.

“I love my manufacturer in Vermont. He was perfect, but we could not afford having an American flag on one of my products,” Anie Rouleau, founder and CEO of The Unscented Company, told Global News.

Rouleau said she recently crunched the numbers and found the current round of tariffs would cost her company $150,000 by the end of 2026.

“It is significant enough to have a plan. So now we actually are executing our plan,” she said.

Story continues below advertisement

The company already produces 80 per cent of its stock in Canada. But Rouleau said some of the business’ ingredients are sourced from around the world, including in the U.S.

She said she is now committing to more local sourcing.

Get daily National news

Get daily Canada news delivered to your inbox so you'll never miss the day's top stories.

“When you make that decision to produce here in Canada, you’re obviously making it more expensive for a while until you build your volume,” she said. “But I’m willing to postpone profitability to make sure we produce here and to create a solid and sustainable economy.”

The Unscented Company is not the only operation to make that commitment.

On Wednesday, Chapman’s Ice Cream announced it was on track to convert more than 70 per cent of its ingredients from the U.S. back to Canada or other countries.

Last year, the company announced it would absorb “all immediate increases in our costs” as President Donald Trump handed down the first round of tariffs on Canada.

Ashley Chapman, chief operating officer, said on social media this week that customers will not face a price increase on Chapman’s ice cream until March 2028.

“Not only have we managed to keep our component costs the same, but we have also partnered with other Canadian companies to reshore production of some items that have never been produced in Canada before,” she said.

Story continues below advertisement

There is no harm in trying to move more of a company’s supply chain back to its home country, Saibal Ray, the chair of supply chain management at McGill University, told Global News. But it is more convoluted than many may think.

“Because of NAFTA and CUSMA, supply chains were so integrated across the three countries, we have not developed competency in certain things because that was not needed,” he said. “The competency was somewhere else.”

He said this is particularly true for small and medium-sized businesses who have become specialized in a particular part of the supply chain.

“For SMEs (small and medium-sized enterprises) to do everything themselves at a scale, is absolutely impossible. It is impossible even for big companies, but for SMEs, it’s absolutely impossible,” Ray said.

He said he credits Canadian businesses who are proactively searching to domesticate their supply chains, but said the transition won’t happen overnight.

“We have to be a little bit more strategic, where we can bring in onshoring things,” he said. “It is much more difficult and much more expensive than people think it is.”

But with animosity between the leaders of Canada and the U.S., he said only good can come from developing more internal capabilities.

“We have to develop capability over the years,” he said. “Otherwise, again, we will face this problem down the road.”