A cross-border manufacturing relationship that once made commercial sense has become another casualty of the Canada-U.S. trade fight. Montreal-based The Unscented Company has stopped contracting soap production to a manufacturer in Vermont and shifted that work back to Canada after founder and CEO Anie Rouleau calculated that the current tariff environment would add roughly $150,000 to her company’s costs by the end of 2026.
The decision is notable because the company was already heavily Canadian: about 80 per cent of its products are produced domestically. Yet its experience shows how even businesses with relatively local supply chains can remain exposed when ingredients, packaging and contract manufacturing cross the border. What began as a tariff problem is increasingly becoming a broader question for Canadian companies: whether decades of North American integration still offer the security they once did.
A $150,000 Hit Changed the Calculation
For Rouleau, the decision was not driven by dissatisfaction with the Vermont manufacturer. She told Global News that she valued the supplier and considered the relationship successful. The problem was increasingly economic. After examining the effect of the latest trade measures, she estimated that tariffs would cost The Unscented Company approximately $150,000 by the end of 2026. For a privately held consumer-products business, that was large enough to justify restructuring part of its supply chain rather than treating tariffs as a temporary expense.
The response was to stop outsourcing soap production to the Vermont company and bring that manufacturing north of the border. It is an important distinction: The Unscented Company did not close an American factory it owned, nor did it withdraw all of its activity from the United States. It changed a contract-manufacturing arrangement. Still, every production contract represents orders, labour and revenue somewhere, illustrating how tariff costs can quietly redirect economic activity before they produce a dramatic factory-closing headline.
The Decision Was About More Than the Border
The economics of tariffs were central, but Rouleau’s comments also highlighted another pressure facing Canadian consumer brands. She said having an American flag associated with one of the company’s products had become increasingly difficult to justify. In a period when trade friction has encouraged greater interest in domestic sourcing, country-of-origin decisions can affect both costs and how a product is positioned to shoppers.
That creates a different calculation from the one companies made when cross-border efficiency was the overriding goal. A Vermont supplier can still be reliable, technically capable and geographically close to Montreal, yet become less attractive when tariffs and consumer sentiment are added to the equation. The Unscented Company has long emphasized sustainability, refills and local partnerships, making domestic sourcing compatible with its wider brand strategy. The commercial lesson is significant: trade measures do not need to make American production physically impossible to change corporate behaviour. They only need to make the alternative sufficiently attractive.
Eighty Percent Canadian Still Left Plenty of Exposure
The Unscented Company was hardly starting from an offshore-heavy production model. Rouleau says about 80 per cent of its stock is already produced in Canada, while the company describes local sourcing and Canadian manufacturing as long-standing priorities. Its corporate history stretches back to the incorporation of Baléco Inc. in 2011, with The Unscented Company brand subsequently developing around fragrance-free home and personal-care products and refillable packaging.
Yet an 80-per-cent domestic production rate does not mean an 80-per-cent domestic supply chain. Rouleau noted that ingredients are sourced internationally, including from the United States. That distinction matters because a bottle filled in Quebec can still depend on chemicals, packaging components or intermediate goods crossing several borders. Modern manufacturing is built around layers of suppliers rather than a single country-of-origin label. The trade war is forcing firms to examine those hidden layers one by one, often discovering that seemingly Canadian products still carry substantial exposure to changes in U.S. trade policy.
Vermont’s Loss Shows How Integrated the Border Has Become
The move is particularly striking because Vermont is not an economically distant manufacturing location for a Quebec company. Canada is, by a wide margin, Vermont’s largest international trading partner. Vermont labour-market data show that the state exported about US$2 billion worth of goods in 2023, with US$683 million—or 34 per cent—going to Canada. Vermont simultaneously imported roughly US$2.5 billion from Canada, representing about two-thirds of its international imports.
Manufacturing dominates that relationship. Manufactured products accounted for more than 93 per cent of Vermont’s exports to Canada in the state’s analysis, with semiconductors, paper products, confectionery, dairy products and machinery among the leading categories. Those figures help explain why the loss of even a relatively modest soap-production contract matters symbolically. The border economy was built around companies treating Quebec and Vermont as neighbouring pieces of one production region. Tariffs introduce a financial barrier into relationships that geography, infrastructure and decades of trade liberalization had made increasingly routine.
Reshoring Is Not as Simple as Changing a Purchase Order
Moving production home can sound straightforward until a company has to locate machinery, suppliers, skilled workers, testing capacity and raw materials capable of replacing an established partner. That difficulty is especially acute for small and mid-sized manufacturers that cannot simply build a new factory whenever trade policy changes. North American supply chains were constructed over decades under increasingly integrated trade agreements, leaving certain specialized products concentrated in only a handful of plants.
The Unscented Company’s shift therefore represents a business strategy rather than an instant solution to every American dependency. Some ingredients will continue to be sourced internationally, and Rouleau says the company is now working toward additional local sourcing. Other businesses face similar constraints. Industry research has found that reshoring can take years because companies must weigh labour expenses, capital spending, supplier availability and logistics. The new priority is increasingly not absolute self-sufficiency, but reducing exposure to any single border or supplier that can suddenly become much more expensive.
Chapman’s Shows the Same Pressure at a Larger Scale
A similar experiment is unfolding at Chapman’s Ice Cream in Ontario. The company says it expects to replace more than 70 per cent of the American ingredients and components it had been purchasing with Canadian or other non-U.S. alternatives by the middle of 2027. Chapman’s has also committed to holding customer prices steady until at least March 2028, placing pressure on the company to find substitutions without simply transferring every additional cost to shoppers.
Some of the replacements show how complicated reshoring can become. Chapman’s has moved toward Australian almonds and Chilean cherries, while partnering with Ontario manufacturer Original Foods to establish domestic production of industrial sugar cones. Original Foods brought in specialized cone-making equipment, while Chapman’s is also moving ice-cream-sandwich wafer production to Canada. The experience demonstrates that “buy Canadian” does not always mean replacing an American supplier with an existing Canadian one. Sometimes domestic capacity has to be created from scratch, and in other cases the lowest-risk substitute may be thousands of kilometres away.
Small Businesses Have Less Room to Absorb the Shock
For smaller exporters, tariff calculations can become existential surprisingly quickly. A Canadian Federation of Independent Business study released in August surveyed 1,833 business owners and found that 40 per cent of respondents exporting to the United States reported having products exposed to the proposed 50-per-cent U.S. tariff measures. Among those affected exporters, 77 per cent expected revenue losses and 35 per cent anticipated losing at least half of their revenue.
Those figures provide useful context for Rouleau’s $150,000 estimate. A multinational corporation may be able to shift production among plants, negotiate lower supplier prices or absorb temporary trade costs across a large balance sheet. A smaller company often has fewer options. It may have one American customer representing a large share of sales or one specialized supplier that took years to qualify. That is why tariff uncertainty can change behaviour even before all costs arrive. Companies begin looking for alternative customers, suppliers and production locations because waiting for the full financial damage can leave too little time to respond.
Ottawa Is Spending Billions to Help Companies Rewire Supply Chains
The federal government is now effectively acknowledging the cost of that adjustment. Following the United States’ decision to impose 50-per-cent tariffs on C$27.6 billion of Canadian goods, Ottawa announced matching countermeasures and a new or enhanced support package worth C$7.5 billion. The measures come on top of nearly C$25 billion in tariff-related support the federal government says it had previously introduced.
Among the new measures is another C$1.5 billion for the Regional Tariff Response Initiative, which is aimed particularly at small and medium-sized companies. Federal program guidance explicitly identifies reshoring production, strengthening domestic supply chains, improving global supply networks and diversifying markets as eligible activities. That language reflects how the policy challenge has changed. Government assistance is no longer focused solely on compensating companies for lost sales. Ottawa is also spending money to help businesses redesign where and how they produce goods, an adjustment that could leave permanent changes even if tariffs eventually disappear.
The Bigger Shift Is From Lowest Cost to Lowest Risk
The Unscented Company’s Vermont decision is one small example of a broader change already visible in Canadian trade data. Statistics Canada reported that merchandise exports to the United States fell 5.8 per cent in 2025, while exports to countries other than the United States increased 17.2 per cent. The American share of Canadian merchandise exports consequently dropped from 75.9 per cent in 2024 to 71.7 per cent in 2025.
That does not amount to economic separation from the United States. The American market remains vastly more important to Canada than any individual alternative, and deeply integrated supply chains cannot be recreated overnight. What is changing is the value companies place on resilience. For decades, the winning supplier was often the one offering the best combination of price, speed and quality. Increasingly, businesses are adding another question: how exposed is that supplier to the next tariff, political dispute or border disruption? For The Unscented Company, that calculation was worth $150,000—and enough to bring a Vermont production relationship home.
