How Trump’s Tariffs on Canada Could Impact the Canadian Website Development Industry

On March 4, 2025, U.S. President Donald Trump imposed a 25% tariff on nearly all Canadian goods entering the United States, with a reduced 10% tariff on energy products, citing concerns over border security and trade imbalances. Canada swiftly retaliated with a 25% tariff on $30 billion worth of U.S. goods, with plans to extend this to an additional $125 billion within 21 days if the U.S. tariffs persist. While these measures primarily target physical goods, their ripple effects could significantly influence Canada’s digital economy, including the website development industry. By examining the precedent set by Trump’s previous tariffs during his first term—specifically the 2018 steel and aluminum tariffs—we can glean insights into how this latest trade conflict might affect Canadian web developers, their clients, and the broader tech ecosystem.

The Precedent: Trump’s 2018 Steel and Aluminum Tariffs

In March 2018, during his first term, Trump imposed a 25% tariff on Canadian steel and a 10% tariff on aluminum, citing national security concerns under Section 232 of the Trade Expansion Act of 1962. Canada responded with retaliatory tariffs on U.S. goods, including steel, aluminum, and consumer products like orange juice and whiskey. The tariffs lasted until May 2019, when a deal was struck to lift them following intense negotiations and pressure from integrated North American supply chains.

The direct impact on Canada’s tech sector during this period was limited, as tariffs targeted physical commodities rather than digital services. However, the broader economic fallout offers lessons. The Canadian dollar weakened by about 3% against the U.S. dollar during the tariff war, reflecting uncertainty and reduced export demand. Businesses in affected industries, such as manufacturing and construction, faced higher costs and tighter margins, leading to reduced investment in non-essential services—including digital projects like website development. A 2019 report from the Bank of Canada noted that the tariffs shaved 0.1% off Canada’s GDP growth in 2018, with ripple effects felt in employment and business confidence.

For the website development industry, the 2018-2019 period saw indirect pressure. Small and medium-sized enterprises (SMEs), which form a significant portion of web development clients, scaled back marketing and digital budgets as costs rose and economic uncertainty loomed. A survey by the Canadian Federation of Independent Business (CFIB) in 2018 found that 40% of small businesses delayed or canceled expansion plans due to trade-related concerns, often including website upgrades or e-commerce initiatives.

The Current Tariffs: A Broader and Deeper Impact

The 2025 tariffs dwarf their 2018 predecessors in scope, applying a blanket 25% levy to nearly all Canadian exports (except energy at 10%). This broad approach threatens to disrupt Canada’s economy more severely, with the Canadian Chamber of Commerce estimating a potential 2.6% GDP contraction (approximately CAD $78 billion) if retaliation persists. The website development industry, while not directly tariffed, could face significant challenges through three key channels: client budget cuts, currency depreciation, and shifts in U.S. client demand.

1. Client Budget Cuts
   Canadian web development firms often serve domestic SMEs in sectors like retail, manufacturing, and construction—industries heavily reliant on U.S. export markets. With 75% of Canada’s exports flowing south, the tariffs will increase costs for these businesses, either through higher import duties if they source U.S. goods or reduced revenue if U.S. demand drops. The 2018 precedent suggests that SMEs will tighten discretionary spending, including on website development. For example, a Toronto-based web agency reported a 15% drop in SME projects in 2018 as clients prioritized operational survival over digital growth. Today’s wider tariffs could amplify this effect, potentially stalling e-commerce builds, site redesigns, and SEO campaigns as businesses hunker down.
2. Currency Depreciation
   The Canadian dollar is already under pressure, with TD Economics forecasting a decline to CAD/USD 0.70 or lower if the tariff war escalates. This echoes the 2018 depreciation but could be more pronounced given the tariffs’ scale. For web developers, a weaker loonie means higher costs for U.S.-based tools and services—think hosting platforms like AWS, software subscriptions (e.g., Adobe Creative Cloud), or freelance talent paid in USD. While this might make Canadian developers more competitive for U.S. clients due to lower relative rates, the domestic market, which accounts for most of their revenue, will likely shrink as clients grapple with inflation and reduced purchasing power.
3. Shifts in U.S. Client Demand
   Many Canadian web development firms, especially in tech hubs like Vancouver and Toronto, serve U.S. clients, leveraging proximity and cost advantages. In 2018, the steel tariffs had little direct bearing on U.S. demand for Canadian digital services. However, the 2025 tariffs could alter this dynamic. U.S. companies importing Canadian goods will face higher costs, potentially prompting them to redirect budgets away from Canadian vendors—including web developers—to avoid additional exposure to trade risks. Alternatively, some U.S. firms might see Canadian developers as a bargain if the exchange rate favors them, though this benefit may be offset by broader economic slowdown in both countries.

Unique Vulnerabilities and Opportunities

Unlike physical goods industries, website development is insulated from direct tariffs since digital services fall outside the scope of CUSMA/USMCA tariff provisions (Article 19.3 prohibits duties on digital products transmitted electronically). However, its reliance on a healthy SME ecosystem makes it vulnerable to economic downturns. The Bank of Canada’s January 2025 analysis warns that a prolonged trade conflict could slash business investment by 10-15%, a trend that hit digital spending hard in 2018-2019.

On the flip side, the industry’s adaptability could mitigate some impacts. During the 2018 tariff spat, some developers pivoted to serve larger enterprises or international clients beyond the U.S., using platforms like Upwork or tapping markets in Europe and Asia. Today, firms might accelerate this diversification, though finding new clients takes time and resources—luxuries strained by a tariff-induced slowdown.

Long-Term Implications

If the tariffs persist, Canada’s website development industry could face a structural shift. The 2018 experience showed that economic uncertainty drives consolidation, with smaller agencies merging or folding as project pipelines dry up. A 2025 recession, which National Bank predicts could rival any since the 2008 financial crisis (barring COVID-19), might push this trend further. Larger firms with diverse portfolios may weather the storm, while freelancers and boutique agencies could struggle.

Moreover, the tariffs could accelerate a push toward digital self-reliance. Canadian businesses, burned by U.S. trade volatility, might prioritize local hosting, open-source tools, and domestic talent—potentially boosting the industry long-term but requiring painful adjustments now. The federal government’s hinted emergency measures, like low-cost loans or EI support, could help, but their focus on traditional industries may leave tech sidelined.

Conclusion

Trump’s 2025 tariffs on Canada echo the 2018 steel and aluminum measures but cast a wider net, threatening deeper economic disruption. For the Canadian website development industry, the fallout won’t come from tariffs on code or pixels but from a battered client base, a weaker dollar, and shifting cross-border dynamics. Drawing from 2018, we know SMEs will cut digital budgets first, and uncertainty will chill investment. Yet, the industry’s resilience—seen in past pivots to new markets and tools—offers hope. As Canada navigates this trade war, web developers must brace for lean times while eyeing opportunities to adapt, diversify, and emerge stronger when the dust settles.