Canadian industry groups reacted sharply on Tuesday morning to U.S. president-elect Donald Trump’s announcement that he plans to impose a 25-per cent tariff on imports of all products from Canada.
While the proposed tariffs would apply across the board, they could hit some Canadian sectors and regions harder than others, experts say.
Trump said he will sign an executive order imposing a 25-per cent tariff on all products arriving in the United States from Canada and Mexico.
The president-elect posted to Truth Social on Monday evening that the duties will be among his actions on his first day back in the White House on Jan. 20, 2025 — Inauguration Day.
Erik Johnson, senior economist at BMO Capital Markets, told Global News the plan could hit hard.
“Around 75 per cent of our exports all go exclusively the United States. We are very tied to the U.S. when it comes to that very meaningful part of our economy,” he said.
Johnson said Ontario, the heart of Canada’s auto manufacturing sector, and Alberta, which ships a large amount of oil and gas south of the border, could feel the pinch.
He said some of the investments that Canada has made in its auto manufacturing industry, particularly around EV production, could slow down.
Flavio Volpe, president of Automotive Parts Manufacturers Association, said Canadian industry was not surprised by the announcement.
“There’s a strange calm, unlike in 2016 and ’17, when he did this the first time,” Volpe said in an interview with Global News.
He added, “There’s a certain amount of anxiety because now you can’t rely on a 20-year commitment in a trade agreement like the original free trade agreement and then the NAFTA. But I think we learned that lesson in 2017, ’18 and ’19,” he said.
Volpe said there was no need for the sector to panic, but instead employ a “prepare and wait” approach.
“We’ve been preparing for the last year, and we certainly haven’t completely gone off the throttle since his first term. We know this is coming,” he said.
Another industry preparing for a Trump presidency is the aluminum industry.
According to the Aluminum Association of Canada, the U.S. consumes about six million tonnes of aluminum a year and produces only 800,000 tons. The rest is largely imported from Canada.
Jean Simard, president and chief executive officer of the Aluminum Association of Canada, said, “Many components that end up in their final destination, such as a car, travel back and forth 10 to 12 times across the border. So if every time they’re impacted by the same tariff, it’s going to be very tough to remain competitive.”
Simard said the industry is considering pivoting to other markets if Trump goes ahead with his tariffs.
“We will be tempted to ship to Europe what we normally ship to the U.S.,” he said, “They’ll take everything we can send there. Especially since Russian metal has been sanctioned out of the market.”
Lana Payne, national president of Unifor, warned that these tariffs could cause higher prices in the United States and job losses in Canada.
“It could have a disastrous impact on jobs in these sectors unless we’re able to work out a deal with the United States right now around Canada being exempt from these tariffs,” she said.
Industry group Canadian Manufacturers and Exporters said the tariffs are a “lose-lose proposition.”
Dennis Darby, the group’s president and CEO, said in a statement, “Canada’s exports to the U.S. are primarily materials and inputs used by American businesses to manufacture other products.”
“Imposing tariffs wouldn’t just harm Canada’s economy, it would also hurt U.S. manufacturers by increasing their costs and disrupting the deeply-integrated supply chains that make North American manufacturing globally competitive,” Darby said.
Farmer groups are warning about adverse effects on agriculture, with the Grain Growers of Canada (GGC) saying that 70 per cent of Canada’s grains are exported, with exports to the U.S. amounting to $14 billion.
“The imposition of sweeping tariffs would create instability for farmers who are already facing tight margins due to rising input costs, changing weather patterns, and increased government taxation,” the group said in a statement.
The Canadian Chamber of Commerce urged a strong response to the Trump tariff proposal.
“Being America’s ‘nice neighbour’ won’t get us anywhere in this situation. President-elect Trump’s intention to impose 25% tariffs signals that the U.S.-Canada trade relationship is no longer about mutual benefit. To him, it’s about winners and losers—with Canada on the losing end,” Candace Laing, president and CEO of the Canadian Chamber of Commerce said in a statement.
However, it is not yet certain whether a Trump administration will go ahead with the tariffs in the way Trump is proposing.
Tu Nyugen, economist at RSM said, “What is more likely to happen is that there will be trade negotiations between the U.S., Canada and Mexico rather than blanket tariffs. Tariffs on all goods coming from a country is actually very difficult to implement in reality.”
— with files from Canadian Press