Toronto, Ontario -- Concern around cross-border trade issues has led Ontario’s automotive small and medium-sized enterprises to cancel or postpone about $2.89 billion in investments over the past year, according to the Canadian Federation of Independent Business.
The CFIB — a non-profit organization representing over 97,000 independently owned Canadian businesses — warns that the broader automotive sector is being severely strained by escalating cross-border trade pressures. It released its findings this month in a report titled The Automotive Anatomy of Ontario. It was authored by CFIB policy analysts Joseph Falzata and Francesca Basta, with research by intern Bernice Balano.
The automotive sector, as defined in the report, includes not only major manufacturers but also the thousands of businesses engaged in vehicle sales, logistics, leasing, parts distribution, collision repairing and other aftermarket services.
“Ontario’s automotive sector cannot thrive without a two-pronged strategy of supporting the large auto manufacturers at its core and supporting the SMEs that supply and service them,” the report states.
“While attracting and retaining major OEMs is critical, so too is ensuring that the thousands of local suppliers — from parts producers to repair shops — have the tools to remain competitive and resilient. When the automotive sector stumbles, the effects ripple across entire communities, touching everything from restaurants to retail stores and other local businesses.”
Survey data shows that nearly half of Ontario auto SMEs have halted investments in response to uncertainty, particularly relating to tariffs. While year-over-year income has fallen by 13 percent on average, the effects go beyond finances. About 33 percent of businesses surveyed have switched to domestic suppliers, and many others are changing their inventory strategies, exploring new international markets or restructuring operations to stay afloat.
“If production stops at the OEM plants, our cleaning and repair business closes,” one CFIB member is quoted as saying. “We’re hanging by a thread.”
The CFIB report also highlights the limited uptake of provincial support programs such as O‑AMP and the Ontario Vehicle Innovation Network, with only one or two percent of SMEs having used them. Eligibility issues and low awareness were cited as key barriers.
To support SMEs, CFIB is urging the provincial government to review and redesign these support programs and to consider measures such as reducing the small business tax rate from 3.2 percent to two percent.
