Following the return of Canadian negotiators and the enforcement of 50% U.S. tariffs, the Canadian business sector is assessing the potential impact of these new levies.
Various business leaders engaged in exporting goods such as plywood and wine, now subjected to these tariffs, express concerns that the high rates could essentially sever business ties with the United States.
Questions arise regarding the magnitude of the blow to the overall economy, the sectors most vulnerable, and the potential repercussions for Canadian employment.
GDP Impact: BMO predicts a 0.5% reduction
The newly imposed 50% tariffs encompass a wide array of products, totaling around $28 billion in Canadian exports to the U.S.
Although this constitutes only about 5% of Canada’s total exports to the U.S., BMO’s senior economist, Robert Kavcic, suggests that the tariffs could diminish Canada’s GDP growth by half a percentage point. This is partly due to businesses becoming cautious about making new investments that contribute to economic expansion.
Kavcic notes that the timing of these tariffs is unfortunate as Canada’s growth was starting to pick up after a sluggish first half of the year.
Impact on Specific Industries
While the overall impact may seem limited on a national scale, certain industries concentrated with tariffs will feel the effects more acutely.
Kavcic highlights that although $28 billion in tariffs is manageable, it could be significant for small or medium-sized businesses in industries facing the 50% tariffs, potentially leading to a loss of access to the U.S. market.
An analysis by CBC of U.S. International Trade Commission export data reveals that the electronics and electrical equipment sector will be most heavily impacted by the tariffs. In 2025, Canada exported over $4 billion worth of electronic equipment subject to these tariffs.
Following electronics, plastics rank second with $3 billion in exports, while furniture, bedding, and lighting come in third with $2.5 billion. Industrial machinery and paper products follow closely behind.
Mainly concentrated in Ontario and Quebec, the manufacturing of electronic goods, plastics, and furniture makes these provinces particularly susceptible to the newly imposed tariffs.
Furthermore, British Columbia faces significant impacts due to the tariffs on paper and wood products, representing over 13% of the province’s total exports to the U.S., the highest rate among all provinces.
Effects on Small Businesses
Aside from major manufacturing sectors, a variety of consumer products are now subject to tariffs, including honey, candles, and hockey sticks.
Kavcic mentions that these products are likely exported by smaller Canadian enterprises and could easily be replaced with American alternatives, potentially disproportionately affecting these smaller players with limited financial resources to endure the challenging circumstances. The Canadian Federation of Independent Business (CFIB) reports that 40% of its exporting members are impacted by the tariffs.
