The recent shifts in global trade policies, including the imposition of a 25% tariff on almost all imported products from Canada by U.S. President Donald Trump, have created significant challenges for Canadian small and medium-sized enterprises (SMEs). With the USMCA agreement effectively breached, Canadian businesses must reassess their strategies to remain competitive in international markets. At Amica Capital, we specialize in helping SMEs navigate these complexities by providing tailored financial solutions, expert guidance, and strategic partnerships.
Strategies to Strengthen Import & Export Capacity
- Diversify Market Entry Strategy
- Reduce reliance on the U.S. market by exploring new trade partners in Europe, Asia, and South America.
- Leverage Canada’s other free trade agreements, including:
- Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – Access to markets in Asia-Pacific.
- Comprehensive Economic and Trade Agreement (CETA) – Trade advantages with the European Union.
- Canada-United Kingdom Trade Continuity Agreement – Preferential access to UK markets.
- Various bilateral agreements with countries in Latin America and beyond.
- Strengthen relationships with domestic buyers and suppliers to mitigate dependence on imports and exports to the U.S.
- Optimize Supply Chain & Logistics
- Identify cost-effective suppliers in tariff-free markets.
- Partner with reliable freight forwarders and customs brokers specializing in non-U.S. trade routes.
- Implement supply chain risk management strategies to reduce exposure to sudden policy changes.
- Access Trade Finance & Working Capital
- Utilize trade finance solutions like factoring, supply chain financing, and letters of credit to maintain cash flow.
- Secure export development loans to facilitate trade expansion beyond the U.S.
- Leverage government-backed programs for financial and advisory support.
- Implement currency hedging strategies to protect against foreign exchange risks.
- Leverage Import & Export Letters of Credit
- What is a Letter of Credit (LC)?
- An LC is a financial instrument issued by a bank that guarantees payment to a seller once the agreed-upon terms are met. This reduces payment risk and enhances trust between importers and exporters.
- Types of LCs for SMEs:
- Import Letters of Credit: Helps Canadian importers ensure they receive goods as per contract terms before payment is made.
- Export Letters of Credit: Assists exporters in securing payments from international buyers by guaranteeing funds through their bank.
- How LCs Benefit SMEs:
- Mitigates risks of non-payment and trade disputes.
- Ensures compliance with trade agreements and regulatory requirements.
- Provides financial security to both buyers and sellers in international transactions.
- What is a Letter of Credit (LC)?
- Utilize Foreign Receivables Payment Insurance
- What is Receivables Insurance?
- Also known as trade credit insurance, this protects businesses against the risk of non-payment by foreign buyers.
- Providers such as Lloyd’s of London, Allianz, and Export Development Canada (EDC) offer policies that:
- Reduce financial exposure to unpaid invoices due to buyer insolvency, political instability, or economic downturns.
- Enhance financing opportunities by making receivables more secure for lenders.
- Allow businesses to expand into new markets with reduced financial risk.
- What is Receivables Insurance?
- Leverage Technology for Trade Efficiency
- Implement digital payment solutions for international transactions.
- Use trade management software to streamline documentation and compliance.
- Adopt e-commerce platforms to reach global customers directly and reduce reliance on physical exports.
- Ensure Regulatory Compliance & Risk Management
- Obtain necessary certifications and adhere to non-U.S. trade regulations.
- Implement currency hedging strategies to protect against foreign exchange risks.
How Amica Capital Can Help
At Amica Capital, we understand the unique financial and operational challenges faced by SMEs in the import/export sector. Our expertise in SME financial solutions can help businesses achieve their international trade goals through:
- Factoring & Supply Chain Finance: Improve cash flow by unlocking capital tied up in receivables and supplier payments.
- Trade Financing Solutions: Access short-term financing to fund imports and exports without straining working capital.
- Import & Export Letters of Credit: Facilitate smooth international transactions by reducing payment risks and improving trade confidence.
- Foreign Receivables Payment Insurance Assistance: Helping SMEs secure coverage to protect against non-payment risks in international transactions.
- Market Entry Strategy Support: Guidance on international expansion, trade compliance, and financial structuring.
- M&A and Capital Raising Support: For businesses looking to scale operations through acquisitions or partnerships.
- Risk Mitigation Strategies: Helping SMEs hedge against currency fluctuations and trade disruptions.
Get Started with Amica Capital
With the collapse of USMCA and new tariffs disrupting U.S.-Canada trade, Canadian SMEs must take bold steps to diversify their markets and financial strategies. Amica Capital is here to help you adapt, innovate, and thrive in this rapidly changing trade landscape.
Contact us today to explore customized trade financing solutions tailored to your business needs. Let’s build your international trade capacity together!
