The return of Canadian negotiators and the implementation of 50% U.S. tariffs have sparked concerns within the Canadian business community about the impact of these new levies. Various business leaders exporting goods now facing these tariffs have expressed worries about losing access to the U.S. market. The imposition of these tariffs covers approximately $28 billion worth of Canadian exports to the U.S., affecting sectors like electronics, plastics, furniture, and machinery.

BMO’s senior economist, Robert Kavcic, estimates that these tariffs could reduce Canada’s GDP growth by half a percentage point. While the overall impact on Canada’s exports to the U.S. is relatively small, specific industries, such as electronics and electrical equipment manufacturing, will bear the brunt of these tariffs. Sectors like plastics, furniture, and industrial machinery, primarily located in Ontario and Quebec, will also be significantly impacted. British Columbia, with a high exposure to paper and wood tariffs, faces challenges as well.

The newly tariffed items include consumer products like honey, candles, and hockey sticks, which may affect smaller Canadian businesses. According to the Canadian Federation of Independent Business (CFIB), 40% of its member businesses exporting to the U.S. are affected by these tariffs. These businesses anticipate revenue declines and decreased competitiveness in the U.S. market.

Economist Trevor Tombe’s analysis suggests that tens of thousands of jobs in Canada could be lost due to these tariffs. Besides the direct impact on affected sectors, supporting industries like trucking and bookkeeping services are also at risk of job losses. The uncertainty surrounding retaliatory measures and potential escalation of tariffs poses a significant risk to Canada’s economy.

The failure of trade talks could also jeopardize the future of the Canada-U.S.-Mexico Agreement (CUSMA), with potential repercussions on job losses and economic growth. The ongoing trade tensions and uncertainty surrounding future trade relations are likely to have long-lasting effects on business decisions and investments in Canada.