Customs Tariffs and Quebec SMEs: Take Action Before It’s Too Late

Customs Tariffs and Quebec SMEs: Why We Must Act Before the Liquidity Crisis Hits

Debt Solutions · July 2026 · 7-minute read

By Émile from the BRESSE Syndics team · Licensed Insolvency Trustees · Quebec City and Montreal

For many Quebec SMEs, 2026 is not a year like any other. The trade war with the United States has disrupted supply chains built up over decades, and U.S. tariffs have reached levels not seen since the 1930s. For business leaders, the consequences are very real: orders are slowing down, margins are shrinking, input costs are rising—and cash reserves are dwindling month after month.

The good news is that a company under pressure isn’t a doomed company—as long as it takes action early.

An Unprecedented Business Environment

Since the spring of 2026, several key sectors in Quebec—steel, aluminum, automotive parts, and agri-food—have been subject to U.S. tariffs that can reach significant percentages on certain products. The province exports more than $50 billion worth of goods to the United States annually, and a significant portion of that value is now at risk. Faced with this reality, a growing number of Quebec exporters have already begun diversifying their markets to reduce their dependence on the U.S. market.

But diversification takes time, and time is costly when revenues fall before costs do. It is precisely in this gap—between the drop in revenue and the rigidity of expenses—that a liquidity crisis arises.

Liquidity: The Real Breaking Point

A business doesn’t close simply because it isn’t profitable on paper. It closes because it lacks the cash flow to meet its obligations as they come due: payroll, suppliers, rent, and government remittances (GST/QST, payroll taxes). A fundamentally sound small business can find itself in financial trouble simply because a major customer has canceled its orders, inventory is piling up, or the line of credit has reached its limit.

What I keep telling the executives who consult with us is that a liquidity problem identified early on can almost always be resolved. The same problem, if ignored for six months, leads to lawsuits, asset seizures, and job losses. The difference isn’t the initial severity of the problem—it’s the moment when you decide to take action.

— Émile Bresse, attorney and licensed insolvency trustee, BRESSE Syndics

Signs That Indicate You Should See a Doctor Right Away

Certain red flags should prompt you to seek help immediately: you’re financing your day-to-day operations using your line of credit without ever repaying it; you’re delaying your payments to Revenu Québec or the Canada Revenue Agency to pay for other things; you’re juggling suppliers to decide who to pay this month; or you’ve stopped looking at your financial statements because they make you anxious. None of these signs is inevitable—but each is a call to action while your options are still open.

⚠ Be careful with government rebates

The GST/QST collected and your employees’ payroll taxes do not belong to you: they are funds held in trust for the government. Using them to finance your operations may expose you to personal liability as a director, even if the company is incorporated. This is one of the first things a trustee will review with you.

Solutions for recovery, not just closure

Many business leaders mistakenly believe that calling in a receiver is tantamount to signing their company’s death warrant. The opposite is true: our primary role is to try to save what can be saved. There are several legal tools available to restructure a viable business while protecting it from its creditors as it reorganizes.

The notice of intent to file a proposal immediately suspends legal proceedings and seizures, and gives the company time to prepare a restructuring plan. A composition proposal (also known as a business proposal) allows the company to negotiate a partial, staggered repayment with all creditors while continuing its operations. And when an informal restructuring is sufficient, a simple agreement with creditors can restore stability without formal proceedings. The right solution depends on your situation—and that is exactly what an initial meeting is meant to determine.

A concrete example

Let’s take a small manufacturing company in the Quebec City area—with about 30 employees—whose revenue was 60% dependent on a U.S. customer. Overnight, the new tariffs make its products uncompetitive in the United States; orders drop by half. The company, which had been profitable for fifteen years, is left with unsold inventory, a line of credit maxed out, and two months of overdue payments to its suppliers.

By seeking advice early on, management was able to file a notice of intent: the legal action brought by a supplier was immediately suspended, which provided the breathing room needed to reorganize production, reduce certain fixed costs, and begin diversifying toward Canadian and European customers. A proposal was then negotiated with creditors to repay a portion of the debts over several years. The company retained most of its jobs and continues to operate today. Had it sought advice six months later, it likely would have had to close.

Every situation is unique: solutions vary depending on the company’s structure, debts, and prospects. That is what the initial meeting is intended to determine.

Why consult BRESSE?

At BRESSE, from your very first meeting, you’ll work with an experienced professional who understands both the numbers and the human reality of being a business leader. For nearly 40 years, our firm—which maintains a personal, human touch—has supported Quebec entrepreneurs with rigor, honesty, and without judgment. We don’t push a specific process: we candidly present all your options—from informal recovery to formal restructuring—and the one that best protects your business, your employees, and your personal liability.

💡 Good to know

The first consultation is free, confidential, and non-binding—in person at our offices in Quebec City or Montreal, by phone, or via video conference. We can usually schedule an appointment within 24 hours. The sooner you seek advice, the more turnaround options you’ll have.

Is your small business under pressure? Don’t wait for a crisis to hit

The pricing landscape in 2026 is beyond your control. But the decision of when to seek help is entirely up to you—and that’s often what makes the difference between a company that turns things around and one that goes out of business.

Free Consultation – Confidential – No Obligation

2026 BRESSE Syndics – bresse.com – 1 844 890-6767