U.S. President-elect Donald Trump's threat to impose tariffs on Canadian goods has sparked concerns among business operators across Canada, with some fearing the decades-long bilateral trade partnership between the two sides could be put to the test.
Trump has warned he would move to place a 25-percent tariff on all Canadian goods imported into the United States as soon as he is returned to office on Jan. 20, demanding Canada does more to increase border security.
Business owners who are working hard to stay afloat amid tough economic times have voiced their concerns over the impact of the potential tariffs.
Among them is Dino Papadimitriou, who operates a family-run designer goods and repair shop in Toronto. He says that many small businesses like his are feeling the pressure, with many already struggling to pay the bills.
"We work really hard on a daily basis to sustain a business and feed [our] families. I think they have to put themselves in our shoes and understand that the lights (electricity), the garbage situation, the taxes—those really affect the bottom line of living, really," he said.
With the U.S. representing the biggest potential market for Papadimitriou's handcrafted goods, the current situation makes for an uncertain future, and he is worried things could be about to get a lot worse.
"The U.S. is the closest large market that Canada has to offer. In terms of transport, an additional tariff will make it virtually impossible to export into the U.S," he said.
Trump's tariffs would likely deal a major blow to Canada's economy which relies heavily on U.S. trade, particularly in industries like manufacturing, energy, and the automotive sector.
Analysts warn Canada's auto industry would bear the brunt, as car parts often must cross the border multiple times before a vehicle is fully assembled.
"The Canadian-U.S. economies are heavily intertwined. The auto sector is essentially one market. We could debate what's most vulnerable, but I would say the auto sector is probably the single most vulnerable to tariffs simply because a lot of auto parts will go back and forth across the border five, six and seven times," said Douglas Porter, chief economist at BMO Capital Markets, a subsidiary of the Bank of Montreal.
This deep economic interdependence has been a cornerstone of Canada-U.S. trade for decades, meaning that tariffs on this scale are likely to destabilize industries and further strain diplomatic ties.
"I think it's too soon to tell, but I would be concerned about the scarring relations for for a while if the U.S. does unilaterally impose 25 percent tariffs without really a good reason," Douglas added.
The turbulent political backdrop in Canada is also adding to the uncertainty, with Prime Minister Justin Trudeau's unexpected resignation earlier this month meaning the country will have to appoint a new leader to handle the rising tensions with its North American neighbor in the months ahead.
In addition, Trump's talk of annexing parts of Canada has further stoked fears and fueled the sense of unease across the border.
The Canadian government is not ruling out any countermeasures should the tariffs go ahead, with local media reporting that Canada has been preparing a list of American goods it could target with retaliatory tariffs if Trump does proceed with his threats.
Canadian business owners growing concerned as Trump’s tariff threat looms large
