The return of Canadian negotiators and the implementation of 50% U.S. tariffs have prompted the Canadian business community to assess the potential impact of these new levies. Business leaders involved in exporting various goods to the U.S. are concerned that the high tariffs could sever their ties with American markets.
BMO’s senior economist, Robert Kavcic, highlighted that the new 50% tariffs cover approximately $28 billion worth of Canadian exports to the U.S., representing only a small fraction of the total exports to the U.S. BMO’s analysis suggests that these tariffs could reduce Canada’s GDP growth by half a percentage point, as they may deter businesses from making new investments crucial for economic expansion.
The impact of the tariffs will be particularly severe in specific sectors heavily targeted by the tariffs. Producers of electronics and electrical equipment are expected to bear the brunt of the tariffs, with Canada exporting over $4 billion worth of electronic products to the U.S. in 2025. Other affected sectors include plastics, furniture, bedding, lighting, industrial machinery, and paper products, mainly concentrated in Ontario, Quebec, and British Columbia.
Smaller businesses exporting consumer goods like honey, candles, and hockey sticks are also at risk due to the tariffs. The Canadian Federation of Independent Business (CFIB) reported that 40% of its exporting members are affected by the tariffs, with many expecting revenue declines and loss of competitiveness in the U.S. market.
University of Calgary economist Trevor Tombe’s analysis suggests that tens of thousands of jobs could be lost in Canada due to the tariffs, impacting not only sectors directly hit but also industries supporting affected sectors. The uncertainty surrounding the tariffs and potential retaliatory measures poses a significant risk to Canada’s economy, with concerns over job losses and the future of trade agreements like the Canada-U.S.-Mexico Agreement (CUSMA).
The ongoing trade tensions and tariff escalations between Canada and the U.S. are expected to have long-lasting repercussions on businesses and investments, creating a climate of uncertainty that could hinder economic growth and job creation in the foreseeable future.
