Derek Friesen of PhiBer Manufacturing Inc., a Manitoba-based agricultural equipment manufacturer, had largely escaped the impact of the Canada-U.S. trade war on his business until the recent announcement of retaliatory Canadian tariffs on $27.6 billion worth of U.S. goods. The company, known for producing agriculture equipment like dash trailers, imports frames for these machines from Iowa. However, starting on Sept. 8, these frames will be subjected to new retaliatory tariffs, affecting their production cost.
Friesen expressed concerns that the increased tariffs on crucial components would lead to a significant rise in the final product prices, making it challenging for farms to absorb such cost hikes. He anticipates that the economic feasibility of their trailers, constituting around 70% of their sales, may diminish in the coming weeks.
While some businesses hope that these retaliatory measures could enhance sales within Canada, others fear the higher costs resulting from the tariffs might strain their ability to navigate the escalating trade war.
The targeted list of newly tariffed items by Canada, effective from Sept. 8, includes a range of products subjected to tariffs of 15, 25, or 50%. These items encompass seafood, certain paper products, furniture, apparel, tools, and motorcycles, with a focus on products made of iron or steel, paper goods, and machinery parts.
Economist Bradley Saunders noted that the selection of goods for tariffs seemed strategic to minimize the impact on Canadian consumers and industries while affecting American businesses. He projected that the countermeasures would have a modest effect on inflation, and government support initiatives could offset a significant portion of the potential drag on business growth.
While some businesses like Danby Appliances might benefit from the tariffs by gaining a competitive edge in the Canadian market, others, like PhiBer Manufacturing Inc., expect adverse effects on their operations. Simon Gaudreault, chief economist at the Canadian Federation of Independent Business (CFIB), echoed concerns that retaliatory tariffs could pose significant challenges for Canadian businesses, especially those heavily reliant on U.S. imports.
Gaudreault emphasized the need for a resolution to the ongoing trade war, as he doubted the effectiveness of the new support programs announced by the federal government to mitigate the impacts of the tariffs on businesses. Despite the allocated $7.5 billion support package for affected businesses and workers, Gaudreault remained skeptical about the ability of these measures to adequately support businesses amidst the trade dispute.
