Canadian businesses are commencing operations today under the federal government’s new dollar-for-dollar tariffs on $28 billion worth of U.S. imports. While many owners are preparing for increased costs and supply-chain challenges, experts suggest that consumers may not see a significant impact.
The newly imposed levies came into effect at 12:01 a.m. today, affecting nearly 700 American products with tariffs ranging from 15% to 50%. Targeted items include commodities like steel and aluminum, household goods such as toilet paper, and niche products like coin-operated arcade games.
These tariffs are Canada’s response to the 50% levies imposed by the U.S. administration on August 22, amounting to over $28 billion on various products including plywood, cement, wine, and hockey sticks.
Dan Kelly, president of the Canadian Federation of Independent Business (CFIB), representing over 100,000 small and medium-sized firms nationwide, expressed concerns that some members feel marginalized in the ongoing trade dispute with the United States.
JS Furniture, a Manitoba-based retailer, estimates that about 60% of its sales by volume come from American goods, particularly laminate-style bedroom suites facing a 50% tariff on larger items like dressers and chests, and 25% on smaller pieces like headboards and nightstands.
General manager Brian Kyca highlighted the challenges of assessing the impact due to limited information availability from agencies like the Canada Border Services Agency. Despite planning to absorb increased costs temporarily and negotiate with manufacturers, there are concerns about passing these costs onto customers.
Economics professor Colin Mang from McMaster University noted that businesses are navigating a delicate balance in deciding whether to absorb tariff costs or pass them on to consumers. Retailers may absorb a significant portion of the costs if they anticipate short-term tariff durations, impacting their profitability.
Bank of Canada Governor Tiff Macklem commented on the tariffs’ economic impact, mentioning that while the costs are substantial, they apply to a relatively narrow range of products.
The trade war has prompted JS Furniture to postpone store expansion plans, affecting its employees as consumer spending becomes more cautious. With sales staff relying on commissions, reduced consumer spending is impacting their earnings.
Mang explained that the new tariffs aim to promote domestic alternatives for U.S. goods, giving Canadian companies a chance to capture a larger market share domestically. However, for the average Canadian household, these tariffs are unlikely to have a noticeable impact on daily life.