The Canadian business community is evaluating the impact of the newly imposed 50 per cent U.S. tariffs, following the return of Canadian negotiators. Business leaders exporting various products to the U.S. are concerned about the severe impact of the tariffs, potentially cutting off their business ties with the United States.
The tariffs cover approximately $28 billion worth of Canadian exports, representing only five per cent of the total exports to the U.S. BMO senior economist Robert Kavcic estimates that these tariffs could reduce Canada’s GDP growth by half a percentage point. This decrease is attributed to business hesitancy in making new investments under the new tariff regime.
Industries like electronics, plastics, furniture, industrial machinery, and paper products will be significantly affected by the tariffs. Provinces like Ontario, Quebec, and British Columbia, where manufacturing of these products primarily takes place, are expected to bear the brunt of the tariffs.
Smaller businesses exporting consumer goods such as honey, candles, and hockey sticks are also at risk due to the tariffs. The Canadian Federation of Independent Business found that a significant percentage of its members exporting to the U.S. are impacted by the tariffs, with expectations of revenue decline and decreased competitiveness in the U.S. market.
Economist Trevor Tombe predicts that tens of thousands of jobs could be lost in Canada due to the tariffs, affecting both directly impacted sectors and industries supporting these sectors. The total estimated job losses could reach 87,000 across various sectors throughout the Canadian economy.
Despite the specific provincial and sectoral impacts, the overall risk posed by the tariffs is the uncertainty they create. The ongoing trade tensions and retaliatory measures between Canada and the U.S. are adding to this uncertainty, potentially slowing down economic growth. Additionally, the failure to reach agreements on trade deals like the Canada-U.S.-Mexico Agreement (CUSMA) further clouds the future of trade relations between the countries.
