Derek Friesen, the owner of PhiBer Manufacturing Inc. in Manitoba, reveals that the recent Canada-U.S. trade tensions had minimal impact on his agricultural equipment business, except for certain products previously affected by a 10% duty increase. However, the situation changed with the announcement of retaliatory Canadian tariffs on $27.6 billion worth of U.S. goods.
Friesen’s company manufactures agricultural equipment, including dash trailers essential for large-scale farming operations. While these trailers have been sourced from Iowa in the past, new retaliatory tariffs will soon apply to the imported frames, starting on Sept. 8. Friesen expresses concerns that the increased taxes on these crucial components will inevitably hike up production costs significantly.
The anticipated rise in costs could render the dash trailers, constituting around 70% of PhiBer Manufacturing’s sales, economically unviable in the near future. The imposition of retaliatory tariffs is expected to escalate expenses for many business owners, potentially making it challenging for them to navigate the escalating trade tensions. While some remain optimistic about the new countermeasures stimulating sales within Canada, others like Friesen fear the adverse effects on their businesses.
Canada’s retaliatory tariffs, ranging from 15% to 50%, will affect a wide array of U.S. products starting Sept. 8. This includes items like seafood, paper products, furniture, apparel, tools, and motorcycles, with a focus on products made of iron or steel, paper goods, machinery, and parts.
Economist Bradley Saunders notes that the targeted selection of goods for tariffs suggests a strategic approach aimed at minimizing the impact on Canadian consumers and industries while impacting American businesses. Saunders believes the overall effect on inflation will be minimal, with government support measures potentially offsetting a portion of the negative impact on business growth.
For companies like Danby Appliances in Guelph, Ontario, the new tariffs could present both challenges and opportunities. Owner Jim Estill acknowledges that some parts used in their products will now face higher prices due to tariffs. However, the increased tariffs on items like refrigerators could make Canadian-made products more competitive compared to U.S. imports, potentially boosting market share for domestic manufacturers.
Despite the potential benefits for some businesses, the general sentiment among business owners, including Estill, is that the retaliatory tariffs may do more harm than good. The escalating trade tensions could lead to consumer reluctance in making significant purchases, further impacting businesses.
Simon Gaudreault, chief economist at the Canadian Federation of Independent Business (CFIB), echoes concerns about the negative implications of retaliatory tariffs on Canadian businesses. CFIB data indicates that businesses importing components from the U.S. outnumber those exporting finished products, making them more vulnerable to the effects of tariffs.
Gaudreault questions the effectiveness of government support measures, expressing doubts about their capacity to mitigate the challenges faced by businesses. While the federal government has announced a $7.5 billion support package for businesses and workers affected by the trade war, concerns remain about the accessibility and impact of these resources on small businesses.
In conclusion, many business owners, like Friesen, emphasize the urgent need for a resolution to the trade war to safeguard their businesses from further disruptions.
