Canadian businesses are assessing the impact of the newly imposed 50 per cent U.S. tariffs now that Canadian negotiators have returned home. The tariffs cover around $28 billion worth of Canadian exports to the U.S., affecting various sectors ranging from electronics to furniture. According to BMO senior economist Robert Kavcic, these tariffs could potentially reduce Canada’s GDP growth by half a percentage point as businesses become hesitant to make new investments.
The industries most affected by the tariffs include electronics, plastics, furniture, industrial machinery, and paper products. Producers in Ontario, Quebec, and British Columbia are particularly vulnerable due to the concentration of manufacturing in these provinces. Smaller businesses exporting products like honey, candles, and hockey sticks could face significant challenges, with some estimating a revenue decline of at least 50 percent.
University of Calgary economist Trevor Tombe’s analysis suggests that tens of thousands of jobs in Canada could be at risk due to the tariffs. Beyond direct job losses, sectors supporting affected industries may also suffer, leading to a potential total of 87,000 job losses. The uncertainty surrounding the tariffs is seen as a significant risk, with economists warning that the ongoing trade tensions could slow down the economy more than the tariffs themselves.
The failure to reach agreements on tariffs could have broader implications for the Canada-U.S.-Mexico Agreement (CUSMA). The potential fallout from the breakdown of CUSMA could result in the loss of over 100,000 Canadian jobs and significant economic damage. With the future of trade deals uncertain and the possibility of escalating tariff battles, Canadian businesses are faced with tough decisions on investments and hiring practices.