Canadian industry groups reacted sharply Tuesday morning to U.S. President-elect Donald Trump’s announcement that he intends to impose 25 per cent tariffs on imports of all products from Canada.
Experts say that although the proposed tariffs would apply across the board, they could hit some Canadian sectors and regions harder than others.
Trump said he would sign an executive order imposing 25 percent tariffs on all products arriving in the United States from Canada and Mexico.
The president-elect posted to Truth Social on Monday evening that the duties will be among his actions on his first day in the White House on January 20, 2025 — Inauguration Day.
The plan could be hit hard, Eric Johnson, chief economist at BMO Capital Markets, told Global News.
He added: “About 75% of our exports go exclusively to the United States. “We are very tied to the United States when it comes to this very important part of our economy.”
Johnson said Ontario, the heart of Canada’s auto manufacturing sector, and Alberta, which ships a large amount of oil and gas south of the border, could feel the pinch.
He said some of the investments Canada has made in the auto industry, especially regarding electric vehicle production, may slow down.
Flavio Volpe, president of the Auto Parts Manufacturers Association, said Canadian industry was not surprised by the announcement.
“There is a strange calm, unlike in 2016 and 2017, when he did it the first time,” Volpe said in an interview with Global News.
He added: “There is a certain amount of concern because now you cannot rely on a 20-year commitment in a trade agreement like the original FTA and then NAFTA.” But I think we learned that lesson in 2017, 2018 and 2019.
Volpe said there was no need for the sector to panic, but instead used a “prepare and wait” approach.
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We’ve been preparing for the past year, and we’ve certainly not gotten completely out of control since his first term. “We know this is coming.”
Another industry preparing for a Trump presidency is the aluminum industry.
According to the Canadian Aluminum Association, the United States consumes about six million tons of aluminum annually and produces only 800,000 tons. The rest is largely imported from Canada.
“Many components that end up at their final destination, like a car, travel back and forth 10 to 12 times across borders,” said Jean Simard, president and CEO of the Canadian Aluminum Association. “So, if they are affected every time by the same tariff, it will be very difficult to maintain on their competitiveness.
Simard said the industry is considering shifting to other markets if Trump goes ahead with his tariffs.
“We will tend to ship what we normally ship to the United States to Europe,” he said. They will take whatever we can send there. Especially since the Russian metal has been banned from the market.
Lana Payne, national president of Unifor, warned that these tariffs could cause prices to rise in the United States and job losses in Canada.
“It could have a catastrophic impact on jobs in these sectors unless we can reach an agreement with the United States now about exempting Canada from these tariffs,” she said.
The Canadian Manufacturers and Exporters Industry Group said the tariffs are a “losing proposition.”
“Canada’s exports to the United States are primarily materials and inputs used by American companies to manufacture other products,” Dennis Darby, the group’s president and CEO, said in a statement.
“Imposing tariffs would not only hurt the Canadian economy, but would also hurt American manufacturers by increasing their costs and disrupting the highly integrated supply chains that make North American manufacturing globally competitive,” Darby said.
Farmer groups are warning of negative impacts on agriculture, with Grain Growers of Canada (GGC) saying 70 per cent of Canadian grain is exported to the United States, worth up to $14 billion.
“Imposing blanket tariffs would create instability for farmers who already face tight profit margins due to rising input costs, changing weather patterns, and increased government taxes,” the group said in a statement.
The Canadian MP urged a strong response to Trump’s tariff proposal.
Being America’s “nice neighbor” will get us nowhere in this situation. President-elect Trump’s intention to impose 25% tariffs indicates that the trade relationship between the United States and Canada is no longer about mutual benefit. “For him, it’s about winners and losers, with Canada on the losing end,” Candace Laing, president and CEO of the Canadian Chamber of Commerce, said in a statement.
However, it is not yet certain whether the Trump administration will go ahead with tariffs in the way Trump is proposing.
“What is more likely to happen is that there will be trade negotiations between the U.S., Canada and Mexico rather than blanket tariffs,” said RSM economist Tu Nyujun. “It is very difficult to implement tariffs on all goods coming from a country in reality.”
– With files from The Canadian Press
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