Derek Friesen, the owner of PhiBer Manufacturing Inc. in Manitoba, had managed to avoid the impact of the Canada-U.S. trade war on his agricultural equipment manufacturing business, except for a few products that were previously affected by 10 per cent duties. However, the scenario changed with the recent announcement of Canadian retaliatory tariffs on $27.6 billion worth of U.S. goods.
PhiBer Manufacturing Inc. produces agricultural equipment, including dash trailers essential for large-scale farmers in crop maintenance. The company traditionally imported frames for these trailers from Iowa. However, starting on September 8, these frames will face new retaliatory tariffs, which Friesen believes will significantly increase the cost of the products.
Friesen expressed concerns that such tariff increases could render the trailers, accounting for 70 per cent of his sales, economically unviable in the near future. While some business owners anticipate higher costs due to the retaliatory tariffs, others are hopeful that these measures might drive increased sales within Canada.
The targeted list of newly tariffed items by Canada will subject various U.S. products to tariffs ranging from 15 to 50 per cent, affecting goods like seafood, paper products, furniture, apparel, tools, and motorcycles. Notably, items made of iron or steel, raw metals, paper products, and machinery are among those facing the largest tariffs. Economist Bradley Saunders noted that the government aimed for a strategic selection of goods with domestic alternatives to minimize the impact on Canadian consumers and industries.
While some businesses, like Danby Appliances in Guelph, Ontario, may face higher costs due to the new tariffs, they also see potential benefits. For instance, the tariffs could make Canadian-made products more competitive against U.S. imports, potentially increasing market share. However, there are concerns that the overall impact of the counter-tariffs may outweigh the benefits, especially if customers delay significant purchases amid the trade war.
Simon Gaudreault, the chief economist at the Canadian Federation of Independent Business (CFIB), expressed worries about the negative implications of the retaliatory tariffs on Canadian businesses. The CFIB data suggests that businesses importing components from the U.S. outnumber those exporting finished products southward, posing a significant threat. Gaudreault emphasized the need for a resolution to the trade war, as he remains skeptical about the effectiveness of new support measures in alleviating the challenges faced by businesses.
The federal government’s $7.5 billion support package for businesses and workers affected by the trade war includes enhanced employment insurance measures and funding for medium-sized businesses. However, concerns remain about the accessibility of these supports to small businesses and the overall efficacy of the measures amidst the ongoing trade dispute. Friesen echoed the sentiment, emphasizing the necessity of resolving the trade war for businesses to thrive.
