While the Trump administration’s threatened 25% tariffs on goods from Canada have been averted for now, they remain a possibility. That leaves MSPs and IT analysts wondering how the situation would affect the IT industry in both nations.
The 25% tariff on all goods from Canada, which was to be implemented earlier in February, was delayed from going into effect for 30 days after Canadian officials agreed to adopt new border protection measures, according to a recent BBC report.
For at least one Canadian MSP, the situation has inspired changes in how the company plans to do business with customers in the U.S.
”We are not curbing U.S. business – we are still happy to accept U.S. clients – but we have begun to curb many of our subscriptions to U.S.-based SaaS companies in favor of domestic and non-U.S. foreign alternatives,” Nelson Ford, the founder and principal of Ottawa, Ontario-based MSP Pilotcore Systems Inc., told ChannelE2E. “And this will not change in the foreseeable future despite the developments [recently]. I am not aware of the tariffs affecting services and, apart from office equipment, we do not buy products from the U.S. for business. We will stretch our existing equipment for several more years.”
ChannelE2E contacted several other Canadian MSPs to get their opinions and comments about the proposed tariff situation, but they either declined to comment or did not respond to inquiries.
Analysts Offer Advice to MSPs
Dan Maycock, analyst and technical leader at Agerpoint, told ChannelE2E that the administration is using tactics similar to those it used in Trump’s first term from 2017-2021.
“MSPs should prepare by building strategies to handle the ‘shock and awe’ period during the negotiations taking place, but they should not throw in the towel and treat any tariff-related activity as a long-term trade resolution,” said Maycock. “Not to say there will not be disruptions that occur as a result of what is taking place, but every company on either side of the border should have plans in place to shore things up until such a time as a longer-term trade resolution is reached and the tariffs are put back on the shelf.”
Jack E. Gold, the president and principal analyst for J.Gold Associates, LLC, said that for MSPs, since the proposed tariffs are aimed at products and not at services, they should not hurt MSP services revenue, unless the MSPs are also installing related equipment.
“But I am confident there will be some bad feelings, especially in Canada, and that may push Canadian companies to look for alternatives that are Canada-based and owned,” which could affect MSPs, said Gold. “If I were an MSP, at this point, I would monitor the situation, but I'm not sure I would take any actions. I am not sure what kinds of actions would even help.”
Gold added that he could not predict what would happen with the tariffs if it became a long-term situation. “Trump tends to be unpredictable in these things,” he said.
Immigration Issues Could Be The Real Problem for MSPs
“The bigger impact will likely be the disruption around immigration, as several larger MSPs have distributed workforces located in and around the U.S. as part of their service offerings,” said Maycock. “And it is not clear yet how the dust will settle as it relates to immigration policy or the impact it would have across different visa types for workers.”
For some MSPs, this could be helpful, while for others, it could be a serious problem, he said.
“This could open up opportunities within the U.S. for MSPs competing with outside parties, with the same perhaps being true for Canada,” said Maycock. “Though I have not yet seen signs that Canada is swinging in the same direction as the U.S. right now regarding immigration and border security. For MSPs, it is worth keeping an eye on the competitive landscape while preparing your balance sheet for potentially an extended trade negotiation until new agreements are put in place and tariffs pressures subside.”
