Tariff Shock Canadian Businesses Face Uncertainty in Wake of US Threats

Tariff Shock Canadian Businesses Face Uncertainty in Wake of US Threats

The recent announcement by US President Trump of 25 percent tariffs on Canadian and Mexican imports has sent shockwaves through Canada, forcing businesses to reassess their dependence on the United States. The uncertainty surrounding these tariffs is creating significant headaches for many sectors.

It was an absolute shock, said Matthew Holmes, vice president of the Canadian Chamber of Commerce. There's an incredible anxiety that comes from the unpredictability and the uncertainty. Holmes emphasized that Canada must prepare for the tariffs by removing barriers to trade between provinces and diversifying its export markets. We need to be ready and have the infrastructure and relationships in place now, he said. Failure to do so would leave Canadian businesses vulnerable to significant losses.

No Quick Fix

A recent survey found that nine out of 10 Canadians agree on the need to lessen Canada's trade reliance on the United States. Prime Minister Justin Trudeau has called for a summit to discuss ways to grow the Canadian economy, including removing internal trade barriers and diversifying export markets. However, experts caution that there is no quick fix.

Robert Gillezeau, an economics professor at the University of Toronto, pointed out that the two economies are extremely interconnected, with over a trillion dollars in trade between the countries. For some sectors, it'll be a little bit easier to disentangle from the United States, he said. But for others, it's going to be a mess. There is no shortcut or easy solution.

The Food Industry A Case in Point

The food industry provides a telling example of the challenges facing Canadian businesses. Mike Bono of Can-Am Food Services explained that they have frozen purchases of some American goods and are seeking alternatives. However, it's not possible to find substitutes for all American offerings.

Interprovincial Trade Barriers

Removing interprovincial trade barriers was identified as a way to boost Canada's economy as far back as 1940. Ottawa led efforts to dismantle these barriers in 2017, but hundreds of exceptions remain. Removing these barriers would improve productivity and increase Canadian GDP, but it would require a significant level of effort and coordination.

Lessons Learned

Some experts are calling for east-west oil and gas pipeline projects to be revived in order to lessen dependency on US infrastructure. For example, oil from western Alberta is currently shipped via a pipeline that passes through the United States before emerging in Ontario. This highlights the need for Canada to diversify its export markets and reduce reliance on US infrastructure.

Overall, the tariffs have sent shockwaves through Canada's business community, emphasizing the importance of preparing for uncertainty and finding ways to diversify trade relationships.

Edward Lance Arellano Lorilla

CEO / Co-Founder

Enjoy the little things in life. For one day, you may look back and realize they were the big things. Many of life's failures are people who did not realize how close they were to success when they gave up.