The constant hum of machinery fills the large cavernous production floor of the Ultra-Form Manufacturing plant in Toronto, where employees take raw steel and aluminum material that had just arrived from the U.S., use the machines to process them into car parts and then ship it back to the United States.
“All of this aluminum, this comes from the U.S.,” Gurdeep Matharu tells CTV News while pointing at stacks of long aluminum bars, then walking over to towers of stacked boxes. “Then these get shipped back to Ohio, and these ones are going to Michigan.”
For Matharu, who is the business development manager of the company, there was a lot on the line during the recent trade talks between the U.S. and Canada, with hopes that aluminum and steel tariffs could be reduced from 50 per cent down to 25 per cent. But instead, with the talks falling apart and Prime Minister Mark Carney promising dollar-for-dollar counter tariffs in September, the situation for his employer could now worsen than before.
“The news was pretty hard to digest because for the last two years, Canadian industries have been suffering too much -- and then on top of that, you hear news like that, the uncertainty is too much ,” said Matharu.
“The counter-tariffs are going to hit us the hardest, now we have to tackle that -- so there’s more uncertainty in the market,” he added. “They not only hit your incoming raw materials but they hit you when you sell the parts out.”
So far, the company says they’ve held back from passing along the additional tariffs costs to their customers, but he’s not sure how long that can last under the current situation.
“Just to keep the customers, we tell [them], ‘okay, it’s an import tariff but we’ll take care of you,’ we take the tariff on our side just so we can keep the business going on,” said Matharu. “But you can do that only so much.”
The company owner, Kacee Vasudeva, says the government assistance has been a huge help so far, providing some relief from tariffs paid on both their imports and exports, and now is eagerly awaiting when the next announcement of aid will come. On Saturday, Carney promised an announcement to help businesses “early next week.”
“People want to do business but they’re not sure about these tariffs because it changes every two months -- and they’re struggling,” said Vasudeva about his conversations with his American business partners. “Right now I’m telling my customers ‘I will take care of tariffs, whatever happens.’”
Passing the costs off to the consumer
The head of the Canadian Federation of Independent Business says Canadian businesses that have been absorbing the additional costs of tariffs so far, but they won’t have much choice but to pass those extra expenses to the consumer now.
“The two big impacts on average Canadians are going to be on their jobs and on their prices,” said Dan Kelly in an interview with CTV News Saturday. “Sadly, I think the price impact is going to be quite significant -- and sadly, it’s going to be fairly immediate because businesses don’t have the bandwidth they used to be able to absorb these costs for any length of time.”
Kelly said the new promise of equally hard-hitting counter-tariffs is likely to have a self-inflicting effect.
“If that’s the case, we’re talking about food, we’re talking about basic groceries and all sorts of other consumer products, not just large industrial supplies,” said Kelly. “So, the impact is going to be fairly swift, as many Canadian importers are going to have to pass those costs along to their consumers.”
But according to Jean Simard, president of the Aluminium Association of Canada, Canada’s economy may bend, but there’s a good chance it won’t break, with how resilient it has been over the past year-and-a-half -- also leaning on creating new trade relationships with other countries.
“We found out and I found out through time that markets have a lot of resilience built in,” Simard told CTV News via Zoom Saturday. “And this is with this is what unfolded under our eyes over the past year, but it’s still kept the prices very high, which means that the cars, the dishwashers, the goods that we purchase normally, are affected in an inflationary way,” he added.
“The goods are costing more and they will keep costing more in the future.”
For Keith Currie, the president of the Canadian Federation of Agriculture, how much of the increased expenses related to the tariffs highly depends on how much aid Ottawa will be announcing for businesses next week.
“We don’t know what the long term effect of this is going to be,” Currie told CTV News Channel Saturday. “I think before we panic, we need to have [Canada’s] best interests at heart, but we are concerned for the long term benefit of the economy of the agrifood industry as a whole. We want to make sure those ranchers have those options to go to.”
As for the Canadian wood sector, there are also likely to be tough decisions related to layoffs or increasing the prices of their goods.
Businesses have to make decisions now, especially with this new 50 percent tax, whether to keep operating or whether to keep people employed, said Brian Menzies with the Independent Wood Processors Association in an interview with CTV News Channel Saturday.
“They’ll be making these decisions shortly here and it’s going to make it harder and harder for these companies to continue,” he added.
