58% of Canadian Firms Hit by U.S. Tariffs Expanded Their Products and Services, New BDC Survey Finds

35,000+ smart investors are already getting financial news, market signals, and macro shifts in the economy that could impact their money next with our FREE weekly newsletter. Get ahead of what the crowd finds out too late. Click Here to Subscribe for FREE.

Canadian entrepreneurs are responding to President Donald Trump’s tariffs by changing what they sell, finding new customers and looking for ways to reduce their dependence on the American market.

A new survey from the Business Development Bank of Canada (BDC), released October 15, 2026, found that 58% of small and medium-sized businesses directly affected by U.S. tariffs expanded their products or services over the past year. That compares with 39% of Canadian SMEs overall.

The findings suggest a shift in how businesses are approaching economic uncertainty. Rather than focusing entirely on cost-cutting or delaying investments, many are pursuing new opportunities.

With 78% of surveyed entrepreneurs now expressing ambitions to grow, the results reveal an increasingly proactive business community confronting trade disruptions, rising costs and intensifying competition.

Tariff-Hit Businesses Are Diversifying Faster Than Other Canadian Firms

The BDC’s 2026 State of Entrepreneurship study identifies a striking difference between businesses exposed to American tariffs and the broader small-business community. Among SMEs directly affected by the trade measures, 58% reported expanding their product or service offerings during the previous 12 months. Across all surveyed SMEs, the corresponding figure was 39%. That represents a 19-percentage-point gap, suggesting tariff-exposed businesses have been particularly active in developing additional revenue opportunities. For manufacturers, diversification might involve introducing different components or services. Retailers and service companies could similarly explore offerings that appeal to different customers or reduce their reliance on existing markets.

The results reflect a broader shift from defending established business models toward adjusting them. However, expanding an offering does not necessarily mean a company has increased its profits or successfully escaped tariffs. The survey measures actions reported by business owners, rather than independently verified financial outcomes. Still, the scale of diversification is significant. It indicates that many affected entrepreneurs are responding to trade pressure by broadening their businesses instead of relying exclusively on their traditional products, customers or sales channels.

The Survey Captures Business Sentiment After Another Round of U.S. Tariffs

BDC gathered responses from 2,500 Canadian business owners and decision-makers through two rounds of online research. The first surveyed 1,500 participants between June 8 and June 29, 2026. A second round included 1,000 respondents between September 4 and September 13, following new American tariffs introduced in late August. This second phase was particularly important because it allowed researchers to examine how business priorities were evolving after another escalation in trade restrictions. The findings were weighted according to geographic region and business employment size to better reflect the Canadian SME population.

The research also has limitations worth understanding. Participants came from a non-probability online sample, meaning the results cannot be assigned a conventional statistical margin of error in the same way as a random survey. Individual findings also use different subsets of respondents. The product-diversification analysis, for example, included 915 valid responses, with smaller groups representing tariff-affected businesses. These details do not invalidate the results, but they matter when interpreting the percentages. The study offers valuable evidence of entrepreneurs’ experiences and decisions, not a precise census of every Canadian business.

Rising Costs and Supply Chain Disruptions Are Driving Business Decisions

The push toward diversification comes as tariffs become a more prominent concern for Canadian entrepreneurs. In BDC’s latest findings, 29% of SMEs identified tariffs as a major business challenge, compared with 19% in 2025. Among companies directly affected by American duties, 54% identified tariffs as a leading challenge, while 36% pointed to rising costs and 31% reported supply chain disruptions. Increased competition was another significant concern, cited by 27% of tariff-affected firms. These pressures make it harder for businesses to maintain established pricing strategies, supplier relationships and profitability.

Separate figures from Statistics Canada reinforce the economic strain. During the second quarter of 2026, 34% of Canadian businesses expected U.S. tariffs to negatively affect them over the following year. Meanwhile, 28.3% reported passing tariff-related cost increases to customers during the preceding 12 months. For a small manufacturer or retailer, absorbing those expenses can reduce already narrow margins, while raising prices risks losing customers. Developing additional products, finding more reliable suppliers and diversifying sales can provide alternatives, although none guarantees protection from higher costs.

More Entrepreneurs Are Choosing Expansion Despite Economic Uncertainty

One of the strongest findings in BDC’s research is the return of growth ambitions. Approximately 78% of Canadian SMEs reported ambitions to expand or transform their businesses, up from 67% in 2025. Expansion also became a more prominent operational priority: 46% placed it among their leading objectives for the next 12 months, compared with 34% the previous year. Among companies directly affected by U.S. tariffs, that share climbed to 52%. These figures suggest a growing willingness to pursue opportunities even as trade disputes continue to complicate financial planning.

Importantly, entrepreneurs are not abandoning financial discipline. Improving profitability remains a leading objective for 40% of SMEs overall, while 32% of tariff-affected businesses identify it as a priority. The distinction between wanting growth and having the resources to achieve it remains important. Hiring employees, purchasing machinery and entering unfamiliar markets all require financial commitments. Some companies may therefore pursue expansion through smaller investments, new partnerships or additional services rather than major construction projects. BDC chief economist Pierre Cléroux interprets the shift as evidence that Canadian entrepreneurs increasingly regard growth and adaptability as responses to uncertainty.

Canadian Businesses Are Finding New Customers Beyond Their Traditional Markets

Diversifying products is only part of the response. BDC found that 64% of Canadian SMEs attracted new customers within their own region over the previous year, while 29% gained customers elsewhere in Canada. Another 15% attracted customers in markets outside the United States, and 11% secured new American customers. The results reveal that businesses are broadening their reach in multiple directions rather than simply abandoning the U.S. market. Domestic expansion can be particularly appealing because Canadian customers may offer opportunities to grow without adding the same international customs complications.

Tariff-affected firms reported notable success in reaching new markets. Among that group, 58% acquired additional regional customers, 47% gained customers elsewhere in Canada and 26% attracted customers outside the United States. Another 18% secured new American customers despite the trade dispute. These percentages reflect overlapping activities, not separate groups that can be added together. The research also found that businesses reaching buyers outside their home province commonly relied on referrals, digital advertising and direct online sales. Each method was identified by roughly one-third of respondents, showing how existing relationships and digital channels can support market diversification.

Companies Are Moving Away From Traditional Supplier Relationships

The shift in Canadian business strategy extends beyond finding new customers. BDC reported that 54% of SMEs began working with at least one new supplier during the previous 12 months. Among businesses directly affected by American tariffs, the proportion reached 72%. Companies that added suppliers frequently looked closer to home: 36% found a new supplier within their province, while 20% established relationships with suppliers elsewhere in Canada. Smaller proportions added suppliers in countries outside the United States or within the American market itself.

Cost management was the leading motivation, with 49% of businesses that changed suppliers identifying lower expenses as an important objective. However, 37% wanted more reliable suppliers, while 30% sought better business relationships or service. Trade tensions also played a direct role: 30% of businesses that changed suppliers did so to replace an American supplier, and 20% specifically wanted to purchase more Canadian goods or services. These decisions reveal how companies are reassessing supply chains based on more than price. Dependability, delivery schedules and exposure to changing trade rules have become increasingly important considerations.

Manufacturers and Medium-Sized Businesses Are Leading Product Diversification

BDC’s findings show that product diversification is particularly common among manufacturers and medium-sized companies. More than 60% of manufacturing SMEs reported expanding their products or services, while the proportion reached 75% among medium-sized businesses. Companies pursuing ambitious growth strategies were also especially active. Among businesses aiming for significant growth, 61% diversified their offerings, compared with 62% of those planning a major transformation. These findings suggest diversification is not limited to businesses defending themselves against tariffs; it is also an important strategy for companies seeking new opportunities.

Businesses are simultaneously changing how they compete. Approximately 85% of surveyed SMEs took at least one action to differentiate themselves, including improving customer service, adjusting prices or refining products. Manufacturers were particularly active: 55% focused on service quality, while 48% adjusted their pricing strategies, compared with 31% of SMEs overall. Among tariff-affected businesses, nearly one in five specifically introduced products or services outside the reach of tariffs as a mitigation measure. That narrower finding should not be confused with the broader 58% diversification figure, which includes offerings developed for different business purposes.

Productivity and Artificial Intelligence Are Becoming Central to Growth Plans

Canadian entrepreneurs are also investing in operational improvements as they respond to economic pressure. The BDC survey found that 88% of SMEs took at least one step to improve productivity in 2026, up from 74% in 2025. Adopting new technology remained a common strategy, reported by 30% of businesses. Meanwhile, 28% increased their use of existing technologies, compared with 20% the previous year. Employee training also gained importance, with 28% of businesses expanding training efforts, up from 22%. These improvements can help companies reduce errors, strengthen customer service and complete more work without proportionally increasing operating costs.

Artificial intelligence is becoming a larger part of those plans. The proportion of SMEs identifying AI adoption or increased usage as a priority rose from 14% in 2025 to 22% in 2026. Among tariff-affected businesses, it reached 28%. A separate BDC digital transformation study found that 96% of SMEs invested in digital technologies during 2025, although the effectiveness of those investments varied considerably. For smaller businesses, the challenge is not simply purchasing software. Integrating useful tools into daily operations and training employees to use them effectively will help determine whether technology delivers meaningful productivity gains.

Two Canadian Businesses Show How Trade Uncertainty Is Changing Growth Strategies

The challenges described in BDC’s findings are already visible at individual Canadian businesses. In Abbotsford, British Columbia, Cedar-Built Greenhouses sells handcrafted greenhouse kits made from western red cedar. According to CEO Scott Frost, approximately 90% of the company’s kits previously went to American customers. Although its products were not themselves subject to U.S. tariffs, American sales declined by 30% amid uncertainty over trade restrictions. Frost subsequently worked with BDC advisers to evaluate international markets, including the United Kingdom, and develop a more structured export strategy.

A similar transformation is unfolding at Montreal-based Aeris Protective Packaging. Co-founder Michael Leiberman built the company from an operation that began at his dining room table into a supplier of specialized packaging for electronics, musical instruments and automotive components. At its peak, 80% of Aeris’s business came from the United States, compared with approximately 70% more recently. The company is now expanding its international relationships, developing additional products and strengthening its European presence. These examples illustrate how businesses are responding to trade uncertainty, although neither case should be treated as representative of every tariff-affected firm in the survey.

Financing Support Could Help Businesses Turn Adaptation Into Lasting Growth

Financing remains an important concern as Canadian businesses consider new products, markets and suppliers. BDC found that 24% of SMEs directly affected by American tariffs were pursuing government financial assistance. The same proportion reported expanding into markets less exposed to tariffs, while another 24% were diversifying supply chains toward countries outside the reach of affected trade measures. In August 2026, BDC expanded its Pivot to Grow financing program after estimating that approximately 5,500 Canadian SME exporters could be directly affected by newly imposed American tariffs. The expanded program offers eligible businesses loans ranging from C$250,000 to C$5 million, including an initial 12-month interest-free period under its new liquidity stream.

Nevertheless, financing alone cannot resolve the challenges confronting Canadian entrepreneurs. BDC reported that 48% of SMEs believe the business environment is changing faster than two years earlier, while 59% think companies that adapt slowly risk falling behind. The encouraging findings about diversification and growth ambitions should therefore be interpreted alongside persistent cost pressures, financing constraints and uncertain demand. Developing new products does not automatically create successful businesses, and the survey does not establish that tariffs have improved economic performance. What it does reveal is a substantial willingness among Canadian entrepreneurs to change direction, pursue customers and invest in their businesses despite an increasingly unpredictable trade environment.

This Options Discord Chat is The Real Deal

While the internet is scoured with trading chat rooms, many of which even charge upwards of thousands of dollars to join, this smaller options trading discord chatroom is the real deal and actually providing valuable trade setups, education, and community without the noise and spam of the larger more expensive rooms. With a incredibly low-cost monthly fee, Options Trading Club (click here to see their reviews) requires an application to join ensuring that every member is dedicated and serious about taking their trading to the next level. If you are looking for a change in your trading strategies, then click here to apply for a membership.