Derek Friesen, the owner of an agricultural equipment manufacturing company in Manitoba, had managed to avoid the impact of the Canada-U.S. trade war until now. However, with the recent announcement of retaliatory Canadian tariffs on $27.6 billion worth of U.S. goods, his business, PhiBer Manufacturing Inc., is now facing challenges. The company imports frames from Iowa for its agriculture equipment, including dash trailers used by large-scale farmers. These frames will be subject to new retaliatory tariffs starting on Sept. 8, which Friesen fears will significantly increase the cost of his products.
Friesen expressed concerns that such tariff increases could make their trailers economically unfeasible for both buyers and sellers in the near future. The retaliatory tariffs are expected to raise costs for businesses, potentially impacting their ability to navigate the escalating trade tensions. While some business owners hope that these countermeasures may boost domestic sales, others, like Friesen, anticipate negative repercussions.
The targeted list of newly tariffed items by Canada includes products such as seafood, paper products, furniture, apparel, tools, and motorcycles. According to economist Bradley Saunders, the selection of goods for tariffs appears to have been carefully chosen to minimize the impact on Canadian consumers and industries while putting pressure on American businesses. The countermeasures are projected to have a slight impact on inflation, with government support measures expected to offset some of the negative effects on business growth.
Not all businesses are equally affected by the retaliatory tariffs. While some, like Danby Appliances based in Guelph, Ont., may face higher prices for certain parts, others see potential benefits. Danby’s owner, Jim Estill, believes that the tariffs could make Canadian-made products more competitive in the domestic market compared to U.S. imports. However, Estill acknowledges that the overall impact of the counter-tariffs may outweigh the benefits, particularly if consumer purchasing behavior is influenced by the trade war.
Simon Gaudreault, chief economist at the Canadian Federation of Independent Business (CFIB), shares concerns about the negative implications of retaliatory tariffs on Canadian businesses. The CFIB data indicates that the tariffs could pose a significant threat, especially for businesses that rely on importing components from the U.S. Gaudreault questions the effectiveness of the government’s support measures, emphasizing the importance of finding a resolution to the trade war as the ultimate solution.
The federal government has announced a $7.5-billion support package to assist businesses and workers affected by the trade war. Despite these efforts, Gaudreault remains skeptical about the effectiveness of these measures in mitigating the impact on businesses. He highlights the challenges small businesses face in accessing the support programs and calls for a swift resolution to the trade dispute to alleviate the burden on Canadian businesses.