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In the realm of small businesses, cross-border trade presents a host of challenges. This is particularly evident for Ranch by Design, a family-owned business based in Lacombe, Alberta, that specializes in western wear and tack supplies. By serving both Canadian and American customers, the enterprise has carved out a niche in providing unique show shirts and specialized clothing for equestrians.
Owner Beth Latwaitis reports that about 15% of her customers come from the United States. They are attracted to her products due to the limited availability of similar items across the border. The favorable exchange rate between the Canadian and U.S. dollars adds to the appeal, making purchases more cost-effective for American buyers. Nevertheless, recent changes in U.S. trade policies have introduced new complications.
The impact of tariffs on small business
Under the administration of Donald Trump, tariffs have significantly impacted small businesses. Latwaitis shared a case involving a customer from California who ordered a show shirt priced at $149.95 CAD. Upon delivery, the customer faced an unexpected bill from Purolator, totaling approximately $80 to $90 USD in tariffs.
This substantial increase nearly doubled the original price of the shirt, prompting the customer to refuse the charge and arrange for a return to Canada. “I told her it was perfectly fine to send it back,” Latwaitis noted. However, complications soon emerged. An email indicated that the customer would incur a return fee of $147.85, in addition to further duties and shipping costs.
Understanding the complications of tariffs
This situation illustrates the complex nature of international trade and tariffs. The shirt in question was produced in India, sold to a U.S. distributor, and then ultimately purchased by Latwaitis before arriving in California. Such a convoluted supply chain complicates the process of determining who is responsible for tariff costs.
According to Trevor Tombe, an economics professor at the University of Calgary, the confusion surrounding tariffs poses significant challenges for small businesses. “When shipping items from Canada to the U.S., it can be unclear who is liable for the tariff,” he stated. This uncertainty can discourage businesses from participating in international trade.
Potential solutions and ongoing challenges
One potential strategy for small businesses like Ranch by Design involves incorporating estimated tariffs into the initial pricing. However, this approach may alienate customers who could be deterred by the additional costs. Tombe notes that the U.S. government’s goal with these tariffs is to reduce imports, creating significant complications that act as a substantial deterrent.
Latwaitis has been selling online to American customers for nearly a decade, but the recent tariff issues present a new challenge. She likened the difficulty of communicating with U.S. Customs officials to “pulling hens’ teeth,” highlighting the confusion and frustration involved in resolving these matters.
Finding a way forward
Small businesses face tariff challenges in international trade
Latwaitis and her American customer are currently seeking a resolution, possibly by splitting the tariff costs. This situation highlights a broader issue impacting small businesses involved in international trade. “There’s no way around these fees,” she stated, recognizing that her business is likely to incur additional expenses as a result.
This ongoing struggle exemplifies the challenges small businesses confront in the current economic landscape. The complexities of tariffs and the unpredictability of international trade require business owners to remain resilient and adaptable to navigate these difficult conditions.