Canadian businesses are commencing operations on Tuesday amidst the implementation of the federal government’s new dollar-for-dollar tariffs on $28 billion worth of U.S. imports. While concerns over increased costs and supply-chain disruptions loom for many owners, experts suggest that consumers might not experience a significant impact.
The new tariffs came into effect at 12:01 a.m. Tuesday, affecting nearly 700 American products with rates ranging from 15 per cent to 50 per cent. Items subject to the tariffs include commodities like steel and aluminum, household goods such as toilet paper, and specialized products like coin-operated arcade games.
In response to the 50-per-cent tariffs imposed by the U.S. administration on August 22, totaling over $28 billion on various products including plywood and wine, the Canadian government initiated the dollar-for-dollar tariffs. Dan Kelly, President of the Canadian Federation of Independent Business (CFIB), representing over 100,000 small and medium-sized firms nationwide, expressed concerns that the latest trade dispute has left some members feeling disposable in the ongoing trade tensions with the U.S.
JS Furniture, a Manitoba-based retailer of home furnishings and appliances, is bracing for the impact of the tariffs. General manager Brian Kyca estimates that 60 per cent of the company’s sales volume is attributed to American goods, particularly highlighting the potential impact on laminate-style bedroom suites due to the imposed tariffs.
The uncertainty surrounding the tariffs has made it challenging for businesses like JS Furniture to gauge the full extent of the impact, with vague information provided by agencies such as the Canada Border Services Agency. Despite the higher costs, JS Furniture plans to absorb them initially while negotiating with U.S. manufacturers to mitigate the impact on customers awaiting deliveries.
Economics professor Colin Mang from McMaster University noted that Canadian businesses are facing a delicate balance in deciding whether to pass on tariff costs to consumers or absorb them. He highlighted that previous trends showed retailers absorbing a significant portion of the tariffs, and the decision this time would depend on the expected duration of the tariffs and its impact on profitability.
Bank of Canada Governor Tiff Macklem expressed concerns about the potential economic impacts of the tariffs, indicating that while they may add costs for some businesses, they are applied to a relatively narrow base. CFIB President Kelly highlighted the disproportionate burden of counter-tariffs on certain sectors, impacting businesses and employees.
Amidst the trade war, JS Furniture’s expansion plans have been put on hold, and its employees, especially sales staff reliant on commissions, are feeling the effects as consumer spending becomes more cautious. Mang emphasized that the new tariffs aim to promote domestic alternatives and opportunities for Canadian companies to capture a larger market share domestically.
Despite the trade tensions, Mang reassured that the new tariffs are unlikely to significantly affect the daily lives of most Canadians, as readily available domestic options mitigate the impact on consumers, suggesting that the situation is manageable for the average Canadian household.
