The automotive industry, with Ontario as the hub of Canada’s sector, is made up of a complex supply chain that crosses Canada, the United States, and Mexico multiple times before a finished vehicle rolls off the line. Earlier this year, that system came under threat as new tariffs disrupted the finely tuned cross-border network.
With sectoral challenges mounting, our team published The Automotive Anatomy of Ontario: Understanding the Impact of Tariffs on Ontario Small Businesses to spotlight how trade tensions are impacting Ontario’s automotive small businesses. The report measures the trade war’s impact and highlights what small businesses in the sector need to stay competitive.
What's the current state of the autorotative industry in Canada?
The Canada-U.S. trade war has hit SMEs hard. On average, their revenue is down 13%, and over half have seen sales drop this year. Nearly half have had to stop or cancel investments, putting almost $3 billion at risk.
To adapt, many are rethinking where they get parts and supplies:
Despite these challenges, most SMEs still feel confident they can handle more bumps ahead.
How are tariffs impacting SMEs in the automotive sector?
Repair shops and service centres are feeling the squeeze as higher tariffs push up costs, forcing them to either absorb extra costs, raise prices or delay jobs. More people are choosing to fix their cars instead of buying new ones, which keeps shops busy but also puts pressure on parts and labour costs. Many don’t have the cash flow to upgrade their equipment or expand.
The report also found that government programs like O-AMP or OVIN don’t provide much help to smaller businesses because the businesses aren’t tech-focused. Strict rules for relief funds like the OTTF, like needing to prove a 30% revenue loss and having $200,000 to invest, mean that help is often out of reach for small local shops.
How does the CFIB fit into all of this?
We created the Auto Snapshot Report to make sure small businesses in the auto industry aren’t forgotten among the big automakers. The report puts clear numbers to the real damage trade tensions and tariffs have caused for local shops, parts suppliers and manufacturers, and service centres. It also shows how government programs can miss the mark, as they’re not often built for everyday businesses that keep the industry moving in mind. By looking at the whole supply chain, the report highlights how much small businesses matter to Canada’s auto sector and what they need to stay competitive.
Canadian small businesses are the backbone of the automotive supply chain, and when they’re disrupted, the entire system feels it. Their agility and specialized expertise give Canada a competitive edge, making support for them not just good policy, but smart economics.
Based on our findings, we’re pushing for practical fixes that put money back into small businesses where it belongs. We’re urging Ontario to cut the small business tax rate from 3.2% to 2% and raise the threshold to $700,000, which could save owners up to $25,000 annually. We’re also calling for changes to programs like OVIN, O-AMP, and OTTF so that more small businesses actually qualify for support. At the federal level, we want money collected through Canada’s counter-tariffs to be returned to impacted businesses, simpler access to duty relief, and fairer rules under CBSA’s CARM system so small importers don’t get left behind.
Would research and advocacy like this help your small business grow? We’re here to support you, join CFIB today!