Business leaders across Canada are voicing concerns and fear over the widespread impact increased tariffs could have on their companies and workers, with some already looking to boost sales in other markets in the event their products become too expensive to sell to American customers.
“The effect of this tariff if it happens as advertised would be catastrophic,” says David Harrison, the owner and inventor of The Wedge Mouthpiece, a B.C.-based company that makes brass mouthpieces for musical instruments.
Harrison says his company operates on margins of between 15 and 20 per cent and wouldn’t be able to absorb a 25 per cent tariff. He’s not sure his customers would be able to stomach the sticker shock if it’s passed on to them.
“For us it will mean our customers won’t be able to afford our mouthpieces or choose not to purchase them,” he says.
Seventy-five per cent of his customers are in the United States, and while Harrison plans to shift his sales strategy to other markets, he’s not sure his company will survive without strong U.S. sales.
“If we lose a significant portion of our U.S. customers we would likely go out of business,” he says.
Nearly $3.6 billion in goods and services cross the U.S.-Canada border every day, part of the world’s most comprehensive trading relationship. Businesses on both sides of the border are warning of the devastating consequences these tariffs might have to both companies and workers.
“Twenty-five per cent is a massive number,” says Nicolas Mulroney, the CEO of Toronto-based Bond Bakery Brands, which owns several commercial bakeries that export products south of the border. Mulroney says the announcement from Donald Trump on Monday night didn’t come as a huge surprise, and his company is still assessing the impact it could have on business.
“We’ve had to work with our customers in the past,” Mulroney says. “With commodity spikes and inflation, this is just the next bump in the road.”
Mulroney is also the son of former prime minister Brian Mulroney, one of the architects of the North American Free Trade Agreement (NAFTA). He is urging the Canadian government to make this issue a priority and negotiate closely with the incoming Trump administration.
“Seeing the intimate relationships that he’s had with President (Ronald) Reagan and President (George H.W.) Bush, these are very impactful negotiations that go on, so I just see yesterday’s news as a tactic to get things on the table and up for discussion.”
While many insiders agree a 25 per cent tariff would be devastating to Canadian businesses that sell to the United States, there is hope that this number is a jumping off point and part of a broader negotiating tactic.
“It would hurt immediately American carmakers and suppliers, which includes all of those invested here in Canada,” says Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, a group that represents producers of parts, equipment and services for the auto industry.
“I think 25 per cent is a non-starter, but I think we need to be patient,” he adds. “This is how Trump negotiates in public.”
With less than 60 days until Trump takes office, Canadian politicians of all stripes are trying to stand united, calling for the incoming president to re-think the tariff.
“The fact is we need them, and they also need us,” said Deputy Prime Minister Chrystia Freeland. “Canada is the largest market for the U.S. in the world, larger than China, Japan, the U.K. and France combined.”