The Canadian manufacturing sector faces potential turmoil as U.S. tariffs loom on the horizon. Dennis Darby, President and CEO of the Canadian Manufacturers & Exporters (CME), has issued a dire warning to federal political leaders in an open letter, highlighting the severe impacts these tariffs could impose. With 48% of manufacturers predicting layoffs or hiring freezes, and nearly half considering relocating production to the U.S., the stakes are high.
The CME's recent survey underscores the urgency, revealing that 90% of manufacturers anticipate significant disruptions if tariffs are enacted. In response, industry leaders are urging the Canadian government to provide robust support measures. This includes incentives for domestic investment, tax relief, and other strategies to stabilize businesses and protect jobs.
"So it’s inflationary to both Canada and the U.S." – Dennis Darby
Many businesses have already put investment and expansion plans on hold due to the uncertainty. The looming tariffs threaten to increase operational costs for small business owners, costs that would inevitably be transferred to consumers. Moreover, Canadian companies could lose sales as U.S. businesses seek cheaper alternatives elsewhere.
The Retail Council of Canada's vice-president of government relations, Matt Poirier, highlighted the broader economic implications.
“To the degree that these tariffs slow the economy, jam up supply chains and whatnot, that basically takes money out of the pockets of people, and then that directly impacts retail sales” – Matt Poirier
The Canadian Federation of Independent Business (CFIB) echoed these concerns, calling for a reduction in the tax burden on businesses to mitigate potential tariff impacts.
“Tariffs would make the cost of doing business higher for many small business owners, the CFIB said, and those costs would be passed on to consumers” – Canadian Federation of Independent Business
Furthermore, most Canadian exports to the U.S. consist of semi-finished goods, parts, or ingredients, making them particularly vulnerable to tariffs. Darby emphasized the need for governmental plans to cushion the blow on Canadian firms if retaliatory measures are necessary.
“If Canada retaliates, the economic fallout will be even worse, driving up costs for businesses and consumers on both sides of the border” – Dennis Darby
The Canadian economy's vulnerability is exacerbated by already high-interest rates. If U.S. President-elect Donald Trump proceeds with broad tariffs on Canadian goods, the economic downturn could intensify.
“The downside to the economy could be greatly exacerbated should Trump move forward with broad tariffs” – Marc Ercolao
Industry groups are pressing for immediate government intervention. Darby stressed the importance of recalling Parliament without delay if legislation is needed for short-term measures.
“If legislation is required to implement any short-term measures, then we believe that it is in the interest of Canadians that Parliament is recalled without delay” – Dennis Darby
Poirier also highlighted the necessity for urgent policies to protect Canadian businesses and consumers.
“Prorogation must not obstruct urgent policies essential to safeguarding Canadian businesses, workers, and families at this critical time” – Poirier
