Due to the breakdown of trade negotiations, early Saturday morning on August 22nd, the United States imposed a 50% new tariff on Canadian products, covering a range of items from wooden furniture, cement, plywood to wine. Canadian businesses and industry leaders are preparing for the comprehensive impact of the tariffs and hoping for swift government support.
In the province of British Columbia, Ron Kubek, the owner of Lightning Rock Winery, successfully delivered a $20,000 order to Washington state in the United States before the midnight tariff took effect.
Kubek, who has been dedicated to expanding into the American market, told CBC that due to the implementation of the new tariffs, this shipment will be his last to the U.S.
“That check, once cashed, will be the last payment I’ve received from the U.S. so far,” he said.
For Canada’s aVenco company, which exports 30% to 40% of its baking paper to the U.S., President Kathleen Chapman expressed concerns about not only expected revenue loss but also a sense of caution from American customers due to the trade tensions.
“The uncertainty is significant, and nobody really has the confidence to advance negotiations or sign long-term contracts,” she said.
The new round of tariffs covers Canadian exports valued at around $28 billion, accounting for about 5% of the total export volume to the U.S. While the impact on the overall economy is relatively small, the extent of the impact across Canada is uneven.
A recent estimate from the Oxford Economics indicates that the manufacturing sector, particularly companies producing plastics, chemicals, cement, and concrete, will face the most severe effects. These companies are mainly concentrated in Quebec and Ontario.
Dennis Darby, the President of the Canadian Manufacturers and Exporters Association (CME), stated that the manufacturing industry is facing its “worst-case scenario.”
“This not only means unemployment and business losses but… even without these new tariffs, our exports to the U.S. have already decreased by about 15% over the past year, leading to tens of thousands of job cuts,” Darby mentioned, noting that half of the business owners he has spoken with recently have suspended construction investments and hiring.
“This is detrimental to our competitiveness,” he added.
Economist Trevor Tombe from the University of Calgary estimated that the new tariffs could result in the loss of approximately 87,000 jobs nationwide. Unemployment is expected to be concentrated in industries such as agriculture, textiles, electronics, furniture, and plastics manufacturing. His analysis also suggested significant indirect losses in industries like warehousing and truck transport.
Tombe pointed out that in Alberta, the province’s products affected by the new tariffs make up a small portion of exports. However, due to the complementary industries supporting exporters in the province, an estimated 9,000 job losses may occur.
Beyond losing access to the U.S. market, Kubek is also worried that Canada’s commitment to implementing retaliatory tariffs “tit-for-tat” against the U.S. after Labor Day (September 8) will further worsen the already dire situation.
Kubek mentioned that some of the glass bottles, screw caps, and packaging cardboard used at his winery come from the U.S., and “If you buy such products (from the U.S.) and they impose equivalent tariffs (from Canada), it will make the cost of winemaking in Canada even higher.”
Regarding other small and medium-sized enterprises, Dan Kelly, the President of the Canadian Federation of Independent Business (CFIB), expressed dissatisfaction with the previous government aid programs that essentially excluded small businesses and were “practically useless” for the entrepreneurs he represents.
Given that the 50% tariff has dealt such a heavy blow to small businesses, he hoped that the government would step up and take swift action this time. He mentioned, “Unless Ottawa can immediately introduce real, truly effective measures… the short-term impact will be severe.”
Osee Podolsky, the General Manager of Podolski Honey Farms, expressed concerns about their family business which sees 90% of its honey sold to the U.S. He fears that the farm, founded by his grandfather over seventy years ago, may now face bankruptcy.
“For us, shipping to those loyal customers who have been buying honey from us is no longer feasible,” Podolsky said.
“In reality, we are unable to continue operations. We could try to secure a larger market share in Canada, but if many other beekeepers do the same, it may turn into cutthroat competition,” he added.
The summer honey production typically ends around August, followed by the busy process of bottling the golden honey and shipping it to various parts of the U.S. Sales usually start in September and continue through the fall.
“If the tariffs are not lifted, I simply cannot bear the costs of sales at this tariff level. I will go bankrupt,” Podolsky emphasized.
Podolsky highlighted that beekeepers on both sides of the border benefit from the Canada-U.S. trade: Americans buy their honey products while Canadians purchase beekeeping supplies made in the U.S.
“I hope that both governments can reach an agreement to lift these tariffs,” Podolsky said. “I believe that some time is still needed for both sides to reach some sort of agreement or solution. I just hope it happens sooner rather than later.”
On August 24th, U.S. Treasury Secretary Bassett stated during a press conference that the U.S. hopes Canada can return to the negotiating table in good faith.