Trump's tariff see-saw dizzies Kanata's tech sector

Ottawa's tech sector is caught in the whirlwind of U.S. President Donald Trump's on-again-off-again tariffs, with some companies weighing whether tariffs will force them to move operations south of the border.

Genomadix is a biotech company located in the Kanata North tech park. It produces a small silver cube that does rapid genetic testing. That cube helps doctors treat strokes, by identifying which patients won't respond to a common drug. 

CEO Steve Edgett says about 75 per cent of their shipments go to the U.S. In the few days Canada faced U.S. tariffs this week, he watched business dry up.

"Our ordering pattern has ground to an absolute halt this week," he said. "People are standing on the sidelines and trying to wait to find out more information."

Genomadix sources many of its materials from Canada – but not the reagents that are vital to genetic testing. They come from the U.S., and replacing those suppliers would be a difficult and lengthy process.

Edgett says the company has been growing rapidly. It's now looking at a genetic test to help treat Alzheimer's. But most of the opportunities are in the U.S., and sustained tariffs would put that growth at risk.

"Even just the delays and the slowdowns that we're seeing, we'll look at hundreds of thousands of dollars of costs, immediately, and potentially millions of dollars of costs over the course of the year," he said. "That's not so much in lost revenue. It's more on delayed growth and slowed down growth."

He says customers aren't prepared to face a 25 per cent hike in their costs. He doubts he'd lose their business right away. There are few competitors, at least for now, but the tariffs might create one.

Eventually, a tariff wall cutting the company off from its primary market could force it to make tough decisions.

"Definitely, if this is something that goes on long term, we would be forced to look at how do we set up manufacturing for the cartridges in the U.S… so that we would be able to remain competitive," Edgett said.

The company recently got Health Canada approval, and is looking to expand its Canadian and European business. That might allow Genomadix to expand to the U.S. and maintain its footprint in Ottawa.

But growing the Canadian business will take time, and there might not be enough of that. In the worst case, it could mean "a catastrophic impact on the workforce that we have here in Canada."

'We just have to understand the rules'

Trump's tariffs have targeted Canadian goods, not services, and that's sparing some Ottawa tech companies from the pain. 

Take Calian, a company that provides tech solutions to defence, healthcare and agriculture, to name only a few sectors it supports. It has 5,000 employees globally, including about 500 in Ottawa, and does about 22 per cent of its business with the U.S.

But CEO Kevin Ford said only five per cent of that business is subject to the tariffs.

"It would be hard, I think, to categorize Kanata North or Ottawa with one brush," he said. "There may be many companies that could be severely affected by this. Others, like Calian, I think can ride through this."

Even with those advantages, navigating through the constantly shifting trade war hasn't been easy. 

"This feels a bit like COVID again..." Ford said. "For me, the tactical element of running a business, it feels like day-to-day, minute-by-minute, hour-by-hour right now, just because of how much this is bouncing around."

According to Ford, Calian is assessing whether long-term tariffs could push it to move more of its operations south of the border. 

But it's hard to make investment decisions without any clarity on how the trade war will play out. In Ford's view, Ottawa's tech sector as a whole is grappling with that uncertainty.

"I think we just have to understand the rules that we're going to have to play by and that's the piece we're not all clear on right now," he said.

Despite the challenges, he sees opportunities. The trade war has already forced Canadian governments to talk about opening up internal trade. He hopes it might also push Canada to be more resilient.

"I think in some ways this might be a positive, longer term," he said, "Because it's forcing us to really take a step and look at Canada as a sovereign nation as somebody who, if maybe we can't be as dependent on some of our partners, how do we build resilience into our own Canadian operations?"