The fear has been realized: President Trump has started a trade war with Canada. On Tuesday, a 25% tax on almost all goods exported to the US and 10% on energy will kick into gear. A violation of our free trade agreement.
The devastating tariffs are expected to remain in place until Trump is convinced Canada is doing enough to stop the flow of illegal immigrants and fentanyl into the U.S., according to government officials.
This is expected to shave billions of dollars off of Canadian GDP and could spiral the economy into a recession.
What does this mean to you?
Canada is retaliating and responding with 25% tariffs on $155B worth of goods. We are entering into an economic trade war.
You can expect higher prices on imported goods, making everyday purchases much more expensive. This will also challenge our exporters. Since tariffs are targeted at Canadian exports, businesses that sell abroad may quickly see reduced demand or have to lower prices to stay competitive.
Estimates of job losses are ramping up, and specific sectors, like automotive, manufacturing, agriculture, and so much more, have been especially concerned, fearing their products will become less competitive internationally. Job losses or wage stagnation could follow. Some businesses may be forced to cut jobs to offset increased costs, and business investment may halt.
Broader Concerns: Immigration, Fentanyl, and Trade Deficits
While the tariffs have sparked immediate concerns about economic downturns, there’s a larger political context. The U.S. has been pressing Canada to do more to control illegal immigration and the flow of fentanyl across the border. These issues have led to the tariffs, as the Trump administration demands stricter policies. Critics argue that the trade deficit with Canada has worsened partly due to these unresolved matters, compounding tensions in trade negotiations.
Impact on Key Industries: Forestry, Aerospace, and Fisheries
The effects of these tariffs will be felt across multiple sectors of the Canadian economy. Industries like forestry, aerospace, and fisheries are particularly vulnerable. The U.S. is a major consumer of Canadian lumber, and tariffs on this sector could decrease demand and raise costs for forestry businesses. Similarly, aerospace companies like Bombardier, which rely on cross-border trade, may see rising costs, while Canada’s fisheries, which export significant volumes of seafood to the U.S., are at risk as well.
Canadian households have been bracing for this reality. While some consumers will adjust their spending habits and shift to buying local or searching for cheaper alternatives, others will find it difficult to make ends meet. There is little doubt that some will try to wait this out and delay major purchases, as tariffs impact big-ticket items like cars or appliances.
If you are struggling to make ends meet or suddenly lose your job, there is no shame in reaching out for help. These are unprecedented times. This is where an expert in the field – a licensed insolvency trustee – can step in and act on your behalf. If you have been living close to the margin, this economic shift can spiral you financially. Now is the time to explore all your options in an effort to make ends meet.
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If you are a business owner, you, too, have options. You may decide to look for alternative suppliers. In some cases, you could pass along costs to the consumer, while others will absorb the hit to stay competitive. In a perfect world, an exporter can diversify markets beyond the tariff-imposing U.S. However, this can lead to delays, higher costs, and quality control issues.
Tariffs can be catastrophic to a business owner, and it is essential that your voice be heard. Lobby for government support for tariff relief, exemptions, and support programs. However, the reality is, that still may not be enough and reaching out for financial guidance could prove to be a lifeline.
If your business is facing financial challenges due to these tariffs, Goldhar can help with corporate restructuring. Our Chartered Professional Accountants (CPA) and Licensed Insolvency Trustees (LIT) provide professional guidance to navigate this uncertainty. Call +1 855-967-3328 or submit a form at goldhar.ca.
It is in the early days; however, tariffs can directly and indirectly impact business owners. For example, businesses that rely on imported raw materials or products may see their costs escalate. On the other hand, industries that are not impacted by tariffs may see growth as consumers shift spending.
Here is what we know for sure.
Approximately $800 billion worth of goods crossed the Canada-U.S. border in the first nine months of 2024, according to government data. The devastating impact of tariffs is going to be widely felt.
If you are impacted, you are not alone. Households and business owners could be slammed, and while it is expected that the government will step in further and offer some aid, at this point, we don’t know what that looks like. So, our only response for now is to control what you can control and ask for help to weather this tariff storm.
Canadians are urged to buy Canadian, stand strong and believe we can be Team Canada at its best. We will get through this.