A business that buys most of its inputs from one overseas supplier looks efficient on a margin line. What that line doesn't show is what happens the day a shipment is delayed at the border, a tariff changes overnight, or the exchange rate moves against the deal's own assumptions.
Key takeaways
A small importer carries two risks a purely domestic business doesn't: a customs or logistics failure that can stop inbound inventory outright, and a currency or tariff move that changes the cost base with no notice and no negotiating room. Both sit outside the historical financials, because both are about what could change going forward, not what already happened.
Before assessing exposure, a diligence file should confirm the target is actually compliant, not just operating. The CBSA's own guide to importing commercial goods sets out the baseline: a Business Number for an import/export account, a determined country of origin for tariff purposes, and confirmation the goods aren't restricted or don't require a permit from another government department. The guide is also direct about where responsibility sits when a broker is used: “you are ultimately responsible for the accounting documentation, payment of duties and taxes.” A target that has outsourced its customs paperwork to a broker has not outsourced the compliance risk — that stays with the importer of record, which after closing is the buyer's own acquisition entity.
The same guide flags two checks that are easy to skip in a fast-moving diligence process but expensive to skip in practice: confirming the country of origin actually claimed for tariff purposes matches how the goods are genuinely manufactured, produced or grown, since that determination is what triggers preferential rates under any given trade agreement, and verifying the specific goods aren't subject to a prohibition or another department's permit requirement — the guide notes plainly that “many goods are subject to the requirements of other government departments and agencies and may require permits, certificates, and/or inspection.” Neither check is exotic on its own; both are the kind of thing a target's existing customs broker may simply have handled correctly for years without anyone at the company being able to explain why, which is a fine outcome until the broker relationship changes or a classification gets challenged.
Canada's own recent trade measures are the clearest available evidence that tariff risk is not theoretical. A federal surtax order imposed a 25% surtax “on the value for duty” of steel, aluminum and certain other goods originating in the US, effective March 13, 2025, with the schedule of affected goods itself revised again September 1, 2025. A business importing inputs subject to a measure like this absorbs the cost the day it takes effect, with no transition period built in for a company that didn't see it coming. Where a target sources materially from a single country or a small group of suppliers, that concentration is a policy-risk question as much as a logistics one — and it is worth reading alongside whether the business has ever actually tested its ability to pass a cost increase through.
A business paying overseas suppliers in a foreign currency carries margin risk from exchange-rate movement whether or not it has ever been tested. No published Canadian benchmark exists for how much margin compression a typical small importer should expect from currency movement, and quoting one would mean inventing it — the honest diligence question is structural instead: does the business hedge, price in the foreign currency and pass the risk to the customer, or simply absorb whatever the exchange rate happens to be on the day it pays. A target with no answer to that question, rather than a bad one, is the more common finding — and the gap itself is the risk. It is exactly the kind of exposure that is easier to see on a physical walk of the receiving dock and inventory floor than in a spreadsheet, since a warehouse holding unusually deep buffer stock is often a business already managing a supply-chain risk informally, without anyone having named it.
What to confirm before relying on an import-dependent supply chain
The target's own Business Number and import/export account are in good standing, independent of any broker relationship.
How concentrated the supplier base is by country of origin, and whether any input is exposed to a current or recent surtax or trade remedy.
Whether foreign-currency exposure is hedged, priced through to customers, or simply absorbed — and who inside the business actually manages that decision today.
Typical lead times and whether there is a qualified backup supplier, or a single point of failure the historical financials have simply never had to test.
A target imports a component representing 30% of cost of goods from a single supplier, invoiced in US dollars, with no hedging in place and no secondary source qualified. The historical financials show stable margins because the exchange rate has been in a narrow range for the trailing three years used to build the earnings history — the stability describes the recent past, not a durable feature of the business. The diligence response is not to try to forecast where the exchange rate goes next, which nobody can do reliably; it is to treat the single-source dependency and the unhedged currency exposure as two separate, addressable findings — qualifying a second supplier before closing where possible, and pricing a working-capital facility or a simple hedging policy into the first-100-days plan rather than assuming the recent, favourable exchange-rate window continues.
No. CBSA's own guidance is explicit that the importer remains responsible for the accounting documentation and payment of duties and taxes even where a broker handles the paperwork. A broker relationship doesn't change who the compliance obligation sits with after closing.
No published figure exists, and the honest answer is to name the mechanism rather than invent a number. Canada's own 25% surtax on certain US-origin goods, in force since March 2025, is a real, dated example of the kind of shock that can hit with no transition period — the specific cost to any one business depends entirely on its own exposure.
Common enough that it shouldn't be treated as a niche risk. Federal SME statistics attribute 37.9% of Canada's $712.8 billion in 2024 exported goods to SMEs specifically — trade exposure, in one direction or the other, is a normal feature of the SME landscape, not an outlier.
Nobody publishes Canadian transaction data, so every valuation in this country quotes an American benchmark. We are building the Canadian one — multiples, asking-to-sale spreads and days on market, by sector and by city. Leave an email and you will see it first.
No pitch, no listings. One email when the first report lands.
