Small business caught in middle of trade war as U.S. products sit on shelves

Amid the push to buy Canadian, some small businesses are caught in the middle, stuck with American products they can’t sell. CTV’s Katie Griffin reports.

An Ottawa small business owner is asking for understanding from customers as he says he is caught in the middle of the Canada-U.S. trade war and stuck with American products he can’t sell.

Benson Mutalemwa owns Knyota Drinks, a non-alcoholic drinks store on Bank Street. He told Newstalk 580 CFRA’s Ottawa at Work with Patricia Boal that he’s stuck with items he bought before the trade war broke out.

“Obviously, as a Canadian, I totally understand the sentiment and totally understand that we have to stand up for Canada,” he said.

“Before the trade war started, we stocked both American and Canadian products. All of a sudden, the trade war breaks out and the response is boycotting American products, and we didn’t know that when we were planning our inventory.”

U.S. President Donald Trump imposed across-the-board tariffs on Canada and has regularly talked about annexing Canada as the “51st state.” In response, the Canadian and provincial governments instituted their own slates of countermeasures, including the pulling of American liquor from store shelves at the LCBO.

The tariffs and annexation threats have led to a strong “buy Canadian” movement from consumers looking to boycott products from the U.S.

Mutalemwa says as soon as the tariffs were implemented, customers were paying much more attention to the labels and choosing not to buy U.S.-made products, which means he’s stuck with product he’s already paid for and which could potentially spoil.

He said the U.S. products make up a smaller percentage of his inventory but were also among the best sellers prior to the trade war.

“When you do go to stock, you stock more when you’re looking at the more popular ones… It’s not just how much of it is American, it’s more how much of it you have to stock when things are good,” he explained.

He also said it’s hard to find one-to-one replacements in Canada.

“The simple answer is we’re stuck. That’s the reality of the current climate, it’s really uncertain. We try to stock any Canadian products that seem to have some demand, but sometimes there’s just simply not like-for-like,” he said.

“It’s a niche business, so it takes a lot of effort on our part to find the products that are good enough for people. That means it’s not going to be easy to simply turn off one switch and turn on another one. It’ll take some time for us to find these products.”

Mutalemwa says he believes the current shift away from large, American chains will benefit Canadian businesses in the long-term but there is some short-term pain for small businesses that still have products from the U.S. that customers are less willing to buy.

“Unfortunately, as a small business, you only have so much capital that you can allocate to different things. So, if you have a significant amount that has been tied up in American product that is now not moving, it’s hard to make the switch.”

He’s asking customers for some understanding.

“I think where we’re headed is good. If you spend at a local business and buy a Canadian product, more of that money stays in Canada, so long-term, I think this is absolutely a positive direction, but in the short-term, let’s try to find a reasonable way to do it,” he said.

“Try to allocate some of your money into local business and we’ll try to stock Canadian products so that more of this money will stay in Canada.”

Mutalemwa isn’t alone.

The best-selling dog food at Chew-That on Beechwood Avenue is from the United States but customers are no longer buying it.

“I tried putting some things on sale and…they just don’t want to buy American,” said owner Renée Hamilton.

She has thousands of dollars worth of unsold inventory and while she is offering samples of Canadian dog food she plans on ordering, she needs money and space to do it.

“When I’m not having the income coming in by the purchases being made, I have to find more money to be able to buy and bring in the Canadian products,” Hamilton said.

“But if I buy and bring in those Canadian products, then I’m still sitting with the inventory that needs to sell as well.”

With files from CTV News Ottawa’s Katie Griffin