Canada might be spared from Donald Trump’s tariffs for now, but Canadian business leaders and owners have been thinking about what might happen with the threatened tariffs — and what they’re doing to prepare.
After wide speculation that the newly sworn-in president of the United States would impose a promised 25 per cent tax on imported goods during his first day in office, multiple news organizations — led by the Wall Street Journal — reported Monday that this won’t be the case.
A survey from the Bank of Canada released Monday showed that nearly a quarter of Canadian businesses expect their costs to rise as Donald Trump takes office again.
About 18 per cent of the businesses polled expected their prices to rise, while 11 per cent expected them to come down, according to the survey. Forty per cent expect that the Trump administration will have a negative impact on their businesses while a third said it was too early to tell.
The polling was done in December.
CBC’s chief political correspondent Rosemary Barton explains what’s happening with trade and tariffs, as of early Monday afternoon, after U.S. media reports that Donald Trump’s proposed tariffs wouldn’t be coming on inauguration day.
Kacee Vasudeva, the CEO of auto parts plant Ultra-Form Manufacturing in Toronto, said he thinks Canadian unemployment numbers will “go through the roof” if the tariffs materialize. His own company has 45 employees.
“I’m concerned. We just got an order this week for $1 million from the U.S. We didn’t count the duty in there yet,” said Vasudeva. If the tariffs happen, he says he’ll have to refuse the order.
Having spent 40 years in the business, Vasudeva says that most of his American customers are fair negotiators and he doesn’t expect that to change. But, he said, “Trump is going to take advantage of us [like] there’s no tomorrow.”
Roughly 90 per cent of the manufacturing firm’s output consists of small automotive components — including cooling system parts, brake line and fuel line fittings — that go across the border and are assembled in the U.S. for clients like Ford and General Motors.
Tariffs will ultimately hurt consumers the most, Vasudeva said, but he said his own costs will go up and that his business could suffer as a result. “We are preparing. We will do whatever we need to do to stay in the business.”
‘We need to be strategic’
Canadian oil prices, weakened in recent weeks as speculation mounted that Trump would impose tariffs during his first day back in the Oval Office, rallied on Monday as news spread that the administration would hold off on the threat.
Instead, Trump will direct U.S. agencies to study trade deficits with other countries and “address unfair trade and currency policies by other nations.”
The federal government confirmed to Radio-Canada last week that it was preparing retaliatory tariffs, applicable to $37 billion in U.S. goods, to impose on the U.S. if Trump went ahead with his own tariffs on Monday.
The Canadian measure wasn’t needed.
“We’re going to wait until we see it in writing,” said Kirsten Hillman, Canada’s ambassador to the United States, in an interview with CBC News.
Potential solutions have been a point of discussion between Prime Minister Justin Trudeau and his Council on Canada-U.S. Relations, which includes business leaders like Tabatha Bull, the president of CEO of the Canadian Council for Indigenous Business.
“How can we think about alternative opportunities for trade with other partners that we have, particularly on some businesses that are really focused on the U.S., and how do we help support them potentially find alternate routes of trade?” Bull said during a recent interview with CBC News.
Perrin Beatty, former president and CEO of the Canadian Chamber of Commerce, said last week there’s “no question” that tariffs potentially imposed by the U.S. on Canada will be painful.
“We could very well find ourselves [being] pushed into recession quite early and in this year as a result. And every Canadian is going to pay a significant price,” he said, noting that Canada is further weakened by a prorogued parliament and an outgoing prime minister.
But Beatty also noted that the tariffs could present an opportunity for Canada.
“It may force us to go back to first principles and say, how can we build a country that’s more sovereign, more independent and more economically secure?”
“We need to remember that any tariffs that we impose are a cost to Canadians, to Canadian businesses and Canadian consumers. So we need to be strategic as opposed to simply being across the board.”