Trade uncertainty isn’t new for Canadian startups, but a fresh wave of potential U.S. tariffs is prompting early-stage businesses to reassess risk and consider alternative markets.
A recent survey conducted by MaRS Discovery District and Communitech shows that more than three-quarters of startups anticipate direct or indirect impacts from a new round of tariffs. Potential areas of impact include revenue, investment, and hiring.
Roughly 70% of the surveyed companies reported generating revenue from the U.S. in the past year, which is a clear sign of how critical cross-border trade is to early growth within Canada’s innovation landscape.
Additional key survey insights include:
- 58% of respondents are concerned with cross-border sourcing, citing supply chain stability as a significant worry.
- 64% of respondents are not planning layoffs, opting to retain top talent.
- 26% of respondents are reassessing the potential for international expansion, focusing on the U.K., the EU, and Asia.
The survey (from February-March 2025) captured responses from more than 175 Canadian companies in the healthtech, cleantech, and advanced manufacturing spaces — many of which are deeply integrated with the U.S. market.
These results are examined further by MaRS, in the detailed article Bracing for impact: Canadian startups grapple with U.S. trade upheaval.
“It’s critical that Canada finds levers to not only build a stronger domestic market but also incentivize home-grown investment. Forces outside of our control are stifling the growth of some of our most promising startups,” says Grace Lee Reynolds, CEO of MaRS Discovery District.
“If we don’t do something about it, there is a risk that too many of them could disappear.”
Short-term resilience is no substitute for long-term strategy
Despite the high risk of disruption, the report suggests that many startups have yet to put concrete plans in place to prepare for new trade barriers.
“Uncertainty often proves more damaging than known challenges. If tariffs were already in place, businesses could calculate costs and plan accordingly,” says Louis Brun, CEO and co-founder of Sollum Technologies.
“But the unknown causes hesitation, putting crucial projects on hold and stalling decisions. This indecision has real, long-term consequences.”
For startups still building out their technology or scaling operations, survey analysis outlines that shifting direction quickly and forming new partnerships can be difficult. But with the scale of disruption facing global trade policy, founders are being urged to revisit their strategies and plan for a range of possible scenarios.
While some startups have started taking short-term measures to minimize risk, such as sourcing materials locally or shifting production timelines, analysis notes these steps are often reactive and limited in scope.
Key recommendations include:
- Implement a diverse lineup of trade partnerships without fully abandoning the U.S. Strategically design plans that allow your business to continue working with them.
- With a drop last year in both pre-seed and seed-stage funding, “many VCs have pivoted to focus on later-stage investments where the risk is lower and the path to liquidity is clearer,” says Hilary Kilgour, MaRS advisor and managing partner of Audaxa Ventures. Canadian founders are urged to think globally. The analysis points to the important role Canadian investors (from venture capitalists to angel investors and family offices) can play in helping startups project a stronger global presence.
- A bright spot in the uncertainty is that most of those surveyed reported they are not planning on layoffs or reducing new hires in this post-tariff environment. Delays might happen, but talent (a key component of success) will stay in place. As Canadian financial planner Shannon Lee Simmons explains in survey analysis, “The most prudent thing to do is pump the brakes for a second. What can we put off for four weeks without hurting our people and our business?”
The survey also asked startups what government supports could be used to help manage any tariff fallout, offering a chance to address long-held issues in the country’s innovation economy. The community recommended:
- Increase funding for business support programs, including those that help with non-U.S. expansion
- Increase procurement of Canadian goods and services
- Make it easier for internal/inter-provincial trade
- Make subsidies available to affected companies
- Develop the export market to non-U.S. countries
- Lower business costs
Local matters
Finally, report analysis points to the recent ‘buy Canadian’ push as a positive development, suggesting that it could extend beyond the grocery aisle to B2B procurement.
“It’s probably the biggest opportunity to mitigate this crisis,” explained Brun.
Reshoring manufacturing has also found renewed interest as a way of strengthening communities and supporting growth.
“Choosing local isn’t just patriotic,” said Brun. “It’s a smart economic decision.”
This article was created with the assistance of AI. Learn more about our AI ethics policy here.
