Derek Friesen mentions that the Canada-U.S. trade conflict had largely left his agricultural equipment manufacturing firm unscathed, aside from a few items affected by a previous 10 percent duty.
This changed with the announcement today of retaliatory Canadian tariffs on $27.6 billion worth of American products.
His company, PhiBer Manufacturing Inc., located in Manitoba, produces agricultural machinery, including dash trailers utilized by large-scale farmers for crop management. They have traditionally sourced the frames for these trailers from Iowa, but as of September 8, those frames will be subject to new retaliatory tariffs.
Friesen asserts that taxing a crucial and costly component like that will inevitably escalate the overall price.
“Farms cannot handle another significant increase like that,” Friesen remarked.
Dash trailers from PhiBer Manufacturing Inc., used by large-scale farmers for crop management, are made with frames imported from Iowa, which will incur new retaliatory tariffs starting September 8. (Jaison Empson/CBC)
He anticipates that these trailers, which account for roughly 70 percent of his sales, may soon become impractical to purchase or sell.
For certain business owners, retaliatory tariffs will result in increased expenses, complicating their ability to withstand the escalating trade conflict — even as others remain optimistic that these new countermeasures might enhance their sales in Canada.
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Specific items affected by new tariffs
As of September 8, Canada will introduce tariffs of 15, 25, or 50 percent on a range of U.S. products.
The new tariffs will apply to various items, including seafood, specific paper goods, furniture, clothing, tools, and motorcycles. Categories facing the highest tariffs include products made from iron or steel, as well as raw metals, paper products, and machinery and components.
Bradley Saunders, an economist at Capital Economics, notes that the federal government appears to have taken a targeted strategy in determining which items to tax.
“The majority of these items have been selected because there are readily available domestic alternatives, aiming to impact American businesses while minimizing the repercussions for Canadian consumers and industries,” Saunders stated in a note on Tuesday.
He added that the countermeasures would likely be relatively minor in the grand scheme of things, providing only a slight inflationary impact, while government assistance for businesses could counteract approximately half of the potential hindrance to business growth.
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According to another analysis of the data by Trevor Tombe, an economist from the University of Calgary, nearly 75 percent of the items subjected to counter-tariffs are industrial supplies or components used in manufacturing other products — costs that will primarily affect businesses rather than consumers.
However, for some companies like Danby Appliances in Guelph, Ontario, the new tariffs may even provide some benefits.
Jim Estill, the owner of Danby, states that some of the components his business utilizes will now face increased pricing due to the retaliatory tariffs — for instance, certain cables used in their snowplows will incur a 15 percent tax under the new regulations.
Jim Estill, owner of Danby Appliances based in Guelph, Ontario, asserts that retaliatory tariffs won’t significantly increase costs at his business and may help keep U.S. competitors at bay for certain products like refrigerators. (Zachary Proulx/CBC)
Estill mentions that these additional costs are manageable for him. Moreover, the retaliatory 25 percent tariffs on items such as refrigerators could actually render his Canadian-made products a more appealing choice for consumers domestically compared to U.S. imports.
“We could potentially capture some additional market share,” he said. “It’s a double-edged sword.”
Nonetheless, Estill believes that the counter-tariffs will likely cause more harm than benefit — particularly if the trade conflict leads customers to postpone significant purchases, like new refrigerators.
Insufficient support for businesses: CFIB
Simon Gaudreault, chief economist at the Canadian Federation of Independent Business (CFIB), shares the view that retaliatory tariffs are primarily detrimental for Canadian entrepreneurs.
CFIB statistics indicate that there are approximately two businesses that import parts from the U.S. for every one that exports finished goods to the U.S., suggesting that retaliatory tariffs pose a greater risk to Canadian enterprises.
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“Our economy relies heavily on reciprocal trade. Consequently, in addition to the export tariffs imposed by the U.S., we are now adding counter-tariffs ourselves,” Gaudreault explained.
Although many of those measures were later suspended, Gaudreault expresses concern that new ones will have a similar outcome, fearing that entrepreneurs may not have the capacity to endure another disruption of this nature.
Finance Minister François-Philippe Champagne states that Canada will respond to the recent round of U.S. tariffs in a ‘proportionate, targeted, and strategic’ manner. Champagne emphasized that the tariffs, affecting over $27 billion in U.S. goods, are focused on fairness.
He is also skeptical that new assistance measures will provide substantial relief.
Alongside the announcement of retaliatory tariffs, the federal government unveiled a $7.5 billion support initiative for businesses and employees impacted by the trade dispute.
Some of these funds will be allocated to bolster employment insurance, while $1.5 billion will be designated for medium-sized enterprises to access through regional development agencies, with additional funds directed towards grants and interest-free loan programs.
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Gaudreault expresses that these initiatives are “unfortunately similar” to previous programs the government has implemented to stimulate businesses during earlier phases of the trade conflict.
He highlights that only one percent of CFIB’s members utilized these programs, primarily due to specific criteria — such as needing $2 million in revenue to qualify for assistance — that hindered small business owners from applying.
Although that particular threshold was adjusted to $1 million in Tuesday’s announcement for a specific program, Gaudreault remains concerned that many businesses will still be excluded from these measures.
Friesen believes that the only true solution lies in bringing an end to the trade conflict.
“We just need this situation to be resolved,” he stated.
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