With massive U.S. tariffs on Canadian goods potentially on the horizon, discussions on how the travel industry will fare have intensified.
U.S. President Donald Trump has mused about slapping 25 per cent tariffs on Canadian exports to the U.S. as soon as Feb. 1, and a recent Corporate Traveller Canada survey is shedding light on how small and medium-sized enterprises (SMEs), which make up 98 per cent of all business and almost 90 per cent of the private workforce in Canada, would cope with such an action.
A recent study conducted by YouGov reveals 85 per cent of SMEs would reduce cross-border travel for business if tariffs or trade restrictions are imposed.
READ MORE: Trump’s tariffs – should the Canadian travel industry be worried?
“This move could have widespread implications for Canada’s economy, disrupting business relationships, supply chains, and the broader tourism and hospitality industries,” said Corporate Traveller, a business travel management company owned by Flight Centre Travel Group.
However, not all SMEs are aligned, the company says, showing the divided nature of the current economic climate.
Nearly half (48 per cent) of Canadian SME workers believe US-Canada trade tensions will cause significant or some disruptions to business operations over the next 12 months, while 47 per cent expect minimal or no impact, the survey says.
Among Canadian SMEs with U.S. operations or clients, 44 per cent report increasing cross-border travel due to trade policy uncertainty, while 40 per cent have reduced such travel.
In the survey, 85 per cent of SMEs anticipate reducing cross-border travel to the US, including 59 per cent expecting significant or moderate disruptions.
Meanwhile, 77 per cent of SMEs are exploring alternative international markets, with this shift being more pronounced among small businesses (80 per cent) than medium enterprises (73 per cent).
65 per cent of Canadian SME workers are concerned about the potential impact of US tariffs or restrictions, including 22 per cent who are very concerned.
“The conversations around potential U.S. tariffs and trade restrictions often focus on rising costs, but their impact on business relationships and cross-border travel is just as critical,” said Chris Lynes, managing director of Flight Centre Travel Group and Corporate Traveller, in a statement. “Our survey shows Canadian SMEs are not only cutting back on US travel but also exploring new markets. While these shifts could reshape the landscape of North American business short term, the Canada-US partnership remains strong and will endure.”
Signalling a potential realignment of business strategies, 77 per cent of SMEs surveyed said they are considering increasing their corporate travel to alternative international markets.
“As Canada’s businesses anticipate disruptions, many are already preparing by pivoting to global opportunities outside the US. This is not just a response to tariffs; it’s an opportunity for growth and diversification,” added Lynes.
Still, the ripple effects are concerning, the company said.
Reduced business travel to the U.S. could significantly impact North American airlines, domestic and cross-border hospitality industries, and tourism services, as SMEs account for a substantial portion of these bookings.
“Proper planning and robust travel management strategies will be critical for businesses responding to these shifts,” the company said.
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