Canadian businesses have commenced operations on Tuesday under the federal government’s new dollar-for-dollar tariffs on $28 billion worth of U.S. imports. While many owners are preparing for increased costs and potential supply-chain disruptions, experts suggest that consumers may not experience significant impacts.
The newly imposed tariffs came into effect at 12:01 a.m. on Tuesday, targeting nearly 700 American products with tariff rates ranging from 15% to 50%. The affected items range from basic commodities like steel and aluminum to everyday household goods such as toilet paper and even specialized products like coin-operated arcade games.
These dollar-for-dollar tariffs are a response by the federal government to the 50% tariffs imposed by U.S. President Donald Trump’s administration on August 22, which covered a wide array of products worth over $28 billion, including plywood, cement, wine, and hockey sticks.
Dan Kelly, the president of the Canadian Federation of Independent Business (CFIB), representing over 100,000 small and medium-sized firms nationwide, expressed concern that this latest development in the trade dispute is disproportionately impacting smaller businesses, leaving them feeling vulnerable in the ongoing trade tensions.
JS Furniture, a Manitoba-based retailer of home furnishings and appliances with multiple locations, estimates that American goods constitute 60% of their sales volume. General manager Brian Kyca highlighted that laminate-style bedroom suites will be significantly affected by the new tariffs, with larger items facing a 50% tariff and smaller items a 25% tariff.
Navigating the impact of these tariffs has been challenging for businesses like JS Furniture, with limited and ambiguous guidance from agencies such as the Canada Border Services Agency. Despite the uncertainties, the company plans to absorb the increased costs temporarily while negotiating with manufacturers to mitigate the impact on customers.
According to Colin Mang, an economics professor at McMaster University, businesses across Canada are now faced with the delicate task of balancing the cost implications of the tariffs. Mang noted that retailers may absorb a significant portion of the tariff costs to maintain competitiveness and consumer prices, which could impact their profitability in the long run.
Bank of Canada Governor Tiff Macklem emphasized that the tariffs are expected to add costs for some businesses but are applied to a relatively narrow range of products. CFIB’s Kelly expressed concern about the disproportionate burden the counter-tariffs place on certain businesses.
The trade dispute has forced JS Furniture to halt its expansion plans, affecting its employees, particularly sales staff reliant on commissions. The company’s employees are feeling the effects as consumer spending becomes more cautious amid economic uncertainties.
Mang highlighted that the new tariffs primarily target U.S. goods with domestic alternatives available, aiming to boost Canadian companies’ market share domestically. Despite these changes, he reassured that the impact on the average Canadian family’s daily life is expected to be minimal, as the tariffs are unlikely to significantly affect consumers.