In a bold move by U.S. President Donald Trump, Canada is now facing its most significant trade threat to date with a 50 per cent duty impacting a broad range of Canadian-made goods. Businesses across the country are bracing for the impending pressure.
Breaking down the sectors in the crosshairs, the electronics industry is set to bear the brunt of the impact. Canada’s electronics equipment exports valued at over $4 billion US are subject to the new tariffs, with certain electrical boards and controllers being the highest-value exports at risk to the U.S. Additionally, the plastics sector, encompassing items like bottles, floor coverings, and various household products, faces a potential loss of about $3 billion US.
The threatened items, totaling more than 500, are tied to three White House proclamations linked to prominent trade issues for the U.S., including provincial alcohol bans, Canada’s protected dairy sector, and the interconnected auto industry. Notably, passenger cars and trucks are excluded from the list, although motorcycles, mopeds, and some components are included. Canada’s beverage exports worth approximately $900 million US to the U.S. are also under threat.
Analyzing the impact across different provinces, British Columbia (B.C.) is expected to be disproportionately affected by the import duties. Goods under tariff threat, notably wood and paper products, constitute more than 13 per cent of B.C.’s total exports to the U.S., surpassing all other provinces. Quebec is also at risk, with around 11 per cent of its U.S. exports now potentially exposed to the new duties, compounding the existing 50 per cent tariffs on steel and aluminum affecting the province.
Conversely, only about one per cent of Canadian exports from Alberta and Saskatchewan to the U.S. are in jeopardy. Given Canada’s heavy reliance on the U.S. as a trading partner, the economy as a whole could suffer a significant blow, with nearly four per cent of total exports to the world subject to the 50 per cent surcharge.
While the U.S. will also feel the impact, it is expected to be less severe due to the size and diversity of its economy. The tariff list represents approximately half a per cent of the U.S.’s total global imports. Notably, research indicates that most costs associated with tariffs are ultimately passed on to consumers.
President Trump’s utilization of a rarely used 1930s law to implement these levies underscores the gravity of the situation, with no exemptions for items covered under the Canada-United States-Mexico Agreement (CUSMA). Negotiations regarding CUSMA are ongoing, further adding complexity to the trade landscape.