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Might some Canadian and Southwestern Ontario companies profit from U.S. tariffs? Probably not, consultants say.
Printed Feb 10, 2025 • 4 minute learn
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U.S. President Donald Trump speaks throughout a information convention within the Roosevelt Room of the White Home on January 21, 2025 in Washington, D.C. (Photograph by Andrew Harnik/Getty Pictures)
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There are not any winners in a commerce conflict, however the affect on Canadian companies will depend upon all kinds of things, from Canada’s retaliatory measures to client behaviour and the make-up of corporations’ steadiness sheets, consultants say. U.S. President Donald Trump’s avowed tariffs – 25 per cent on Canadian items and 10 per cent on power – and Canada’s retaliatory tariffs on American items have been paused till no less than March 4 as each nations work on border-related safety measures. Our Jennifer Bieman reviews on whether or not some Southwestern Ontario industries may stand up to the potential commerce conflict higher than others.
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AGRIFOOD
It’s potential the U.S. tariff risk, and the elevated value of American items if Canada implements retaliatory tariffs, will encourage customers to show to Canadian merchandise, stated Ananth Ramanarayanan, affiliate professor of economics at Western College.
However many made-in-Canada merchandise have U.S. inputs or elements, whose worth will rise because of the commerce conflict, Ramanarayanan stated. These elevated prices are prone to be handed right down to customers, he stated.
Canada has a free commerce settlement with Mexico, a serious provider of contemporary produce on Canadian grocery retailer cabinets, stated Ramanarayanan. It’s not clear that, if American produce costs rise with the retaliatory tariffs, Canadians will robotically go for greenhouse-grown peppers from Ontario as a substitute of Mexican imports, he stated.
The commerce conflict may also hurt the underside strains of bigger Canadian companies, who will see the U.S. gross sales they’ve come to depend upon decline sharply, stated David Soberman, professor on the College of Toronto’s Rotman College of Administration.
A Canadian granola bar producer, for instance, that’s giant sufficient to have their merchandise in grocery shops coast-to-coast is sort of actually making the most of Canada-U.S. free commerce to get their granola bars on American retailer cabinets, he stated.
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The U.S. tariffs imposed on Canadian imports will elevate the price of these merchandise for Individuals, Ramanarayanan stated.
“Consumers in the U.S. will buy less from Canada. That’s going to be hard for any Canadian business that exports to the U.S. They can’t just sell everything they were going to sell in the U.S. in Canada instead,” he stated.
DOMESTIC TRAVEL, LEISURE INDUSTRY
It’s potential that patriotic Canadians disheartened by the Trump administration’s commerce conflict will forgo U.S. journey and prioritize home locations as a substitute.
“Some businesses may benefit from Canadians’ decision not to travel to the U.S. There are snowbirds that have curtailed their activities. Those people will be staying at home in Canada and spending money here,” Soberman stated.
However that call to remain in Canada may be a handy excuse for the relative lack of shopping for energy the loonie has compared to the U.S. greenback now, he stated.
“Our dollar is very weak right now,” Ramanarayanan stated. “It’s much costlier this year, compared to last year, for Canadians to travel in U.S. prices.”
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The potential soft-landing for Canadian tourism and leisure companies within the occasion of a commerce conflict can be dashed when the Canadian economic system slips into recession, which is extensively anticipated if Trump goes by together with his risk.
Tariff-related job losses and financial ache imply much less discretionary earnings floating round for holidays and recreation.
“The overall impact of this thing, if it happens, is not going to be positive,” Soberman stated.
CANADIAN BREWERS, DISTILLERIES, WINERIES
It’s potential a small vineyard, for instance, that does regional enterprise solely might see demand for its merchandise develop as Canadians search to assist native corporations, Soberman stated.
“If you’re a Canadian manufacturer that does not export to the U.S., you may be able to increase your volume. There may be isolated cases of Canadian companies doing well because of the buy-Canadian trend, but it’s going to be the exception not the rule,” he stated.
Bigger Canadian alcohol producers are prone to be exporting to the U.S., Soberman stated, and can see declines in that a part of their enterprise which might be extremely unlikely to be offset by development in home gross sales.
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It is usually troublesome to pinpoint the affect of the latest buy-Canadian mindset on client behaviour, Ramanarayanan stated, and the way lengthy and underneath what circumstances clients will keep it up.
Even when Trump’s tariffs come and the Ontario authorities makes good on its promise to drag U.S. merchandise from LCBO retailer cabinets, different non-Canadian choices stay for customers, Ramanarayanan stated.
“Somebody who usually buys American whisky, what’s their next best option? Is it a Canadian whisky, or is it an Irish whisky? It’s not easy to tell,” he stated, including value and high quality are two elements that might eclipse buy-Canadian patriotism.
“It will take a lot of data to figure out how people choose to substitute these things, but it’s not a given that Canadian products are it.”
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