Derek Friesen, the owner of PhiBer Manufacturing Inc. in Manitoba, stated that his agricultural equipment manufacturing business had been mostly unaffected by the Canada-U.S. trade conflict, except for certain products that were previously subjected to 10 per cent duties. However, a recent announcement of Canadian retaliatory tariffs on $27.6 billion worth of U.S. goods has changed the situation.
The company, known for producing agriculture equipment like dash trailers used by large-scale farmers, has been importing frames for these machines from Iowa. Effective September 8, these frames will now face new retaliatory tariffs, impacting the company’s operations and costs.
Friesen expressed concern that the increased taxation on crucial components would significantly raise the final product prices, making it challenging for farms to absorb the additional costs. He anticipates that the economic feasibility of buying or selling these trailers, which constitute 70 per cent of his sales, may be compromised in the near future.
The introduction of retaliatory tariffs is expected to bring higher expenses for many businesses, potentially making it harder for them to navigate the escalating trade tensions. While some are optimistic that these countermeasures could enhance domestic sales, others like Friesen are wary of the adverse effects on their operations.
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Overview of Newly Tariffed Items
Starting on September 8, Canada will impose tariffs ranging from 15 to 50 per cent on various U.S. products. The affected goods include seafood, specific paper products, furniture, apparel, tools, and motorcycles. Items made of iron or steel, paper products, machinery, and parts are among those facing the highest tariffs.
Bradley Saunders, an economist at Capital Economics, noted that the selection of goods for tariffs appears to have been carefully targeted to minimize the impact on Canadian consumers and industries while aiming to hurt American businesses. The overall economic effect of these countermeasures is expected to be modest, potentially leading to a slight inflation increase, with government support initiatives likely offsetting some negative consequences on business growth.
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University of Calgary economist Trevor Tombe analyzed the tariffed items and found that nearly three-quarters are industrial supplies or materials used in production processes, implying that businesses rather than consumers will bear the brunt of the cost increases.
For businesses like Danby Appliances in Guelph, Ontario, the new tariffs may present mixed outcomes. Owner Jim Estill mentioned that while some parts used by the company will face higher prices due to the tariffs, the increased costs are manageable. Additionally, the tariffs on certain products, such as refrigerators, could potentially make Canadian-made goods more competitive in the domestic market compared to U.S. imports.