U.S. pauses tariffs on Canadian goods but 'still lots of uncertainty,' says Thunder Bay Chamber of Commerce
Chamber president says they hope to shine 'a spotlight' on local products
With the U.S. hitting pause on a plan to charge a 25 per cent tariff on most Canadian imports, Thunder Bay exporters now have some time to prepare for a potential trade war between the two countries, the president of the northwestern Ontario city's Chamber of Commerce said.
However, there are still concerns in the wake of President Donald Trump deciding to hold off on the proposed tariffs for at least a month as Canada and the U.S. work further on the issue, said Charla Robinson.
"Certainly we've been holding our breath a little bit," Robinson said Tuesday morning. "But knowing that this is only a short-term reprieve at this point, it does give Canadian businesses and the government more time to really make that case about this is not a good thing for us, or for you, but it's still lots of uncertainty."
The 25 per cent tariff was announced on the weekend and scheduled to go into effect Tuesday. In return, Canada announced a retaliatory 25 per cent tariff on U.S. goods, expected to go into effect that same day.
However, on Monday, Prime Minister Justin Trudeau spoke with Trump twice and later announced the president had agreed to pause the tariffs for at least a month.
Robinson said if the tariffs go ahead, the northwestern Ontario softwood lumber industry would be hit hard.
Softwood lumber producers already pay a tariff of about 14 per cent when shipping to the U.S., and that's expected to increase later this year.
Any new 25 per cent tariff would be in addition to those existing softwood lumber tariffs.
"Thunder Bay has a very robust forestry sector and that has been, for decades, a real pillar and foundation of our regional economy," Robinson said. "Forestry is also a major exporter to the United States, so we know that these tariffs are going to be really harmful just because of that massive number of jobs that are involved in forestry that will be so strongly impacted."
'There will be an impact'
But softwood lumber exporters wouldn't be the only ones affected, Robinson said.
"Thunder Bay has a pretty small pool of exporters, but most of those exporters, like 99 per cent of those exports, do go to the U.S.," she said on Monday before the deal between Canada and the U.S. was announced. "We're not very diversified as to our exporting because, it is simple, right? It's a little easier to go to Minnesota, or Michigan or some of the Midwest states from here than maybe it is to go to Europe, etcetera.
"So it's often a first step for a company to go to the U.S. to try this exporting thing before they go more broadly," she said. "That's why so much of what we do export is going to the states, and that's why there will be an impact."
Robinson said the effects of Canadian tariffs on U.S. goods would also be felt in Thunder Bay.
"We do have local stores in Thunder Bay that carry certain brands that are only available from the U.S.," she said. "Some of those businesses are going to be having to make those decisions moving forward as this goes on as to whether they're going to continue to carry those brands.
"Clearly the cost is going to be added to them, which means they're going to have to put the cost of those products up," Robinson said. "Will there still be consumer demand? So that is definitely something that businesses are looking at as well."
Brewing fears about how tariffs would impact costs
Taras Manzie, president and CEO of Kenora's Lake of the Woods Brewing Company, said Monday a potential trade war "won't do anything for anybody except drive up costs."
Manzie said Lake of the Woods has a partner in the United States that operates under a licence and brand equity.
"We don't really do too much trade across the border, and that's one of the reasons why we worked with them to set up a satellite brewery there, so that their are boots on the ground, and production on the ground, in the U.S.," he said.
The brewery, Manzie said on Monday, uses as many Canadian products as it can in its process.
"We buy, I would say, exclusively Canadian grain," he said. "Unfortunately, some of the things we use in products, like cans, don't really come too much from Canada, or if the metals originated [in Canada], they're going offshore to get processed.
"Our water, obviously, is Lake of the Woods water, and our hops, well, Canada imports a lot of hops and obviously hops is a key ingredient in in making beer on this side of the border," Manzie said. "Some of the hops in our mix are from the U.S. We have forward contracts where we're insulated for a year.
"I think we're all hoping to see this go away quickly."
'It's been a struggle'
However, if a trade war were to take place and last for an extended period, costs to the consumer will increase, he said.
"This past summer was basically our best summer since pre-pandemic," Manzie said. "We saw a lot of return of U.S. traffic, lots of people out.
"The tourism and hospitality industry was really punished during the pandemic, and I as far as I'm concerned, it's still not fully back. We see both sides of it because we have a busy taproom here in Kenora with a full-service restaurant, on top of we manufacture beer and supply that to other bars and restaurants across northwestern Ontario and in Manitoba.
"It's been a struggle, I can tell you," Manzie said. "Just like folks are seeing price increases in groceries at the retail level, in grocery stores ... we see that on the input side of restaurant supply.
"Any time cost of anything goes up, it has a ripple effect throughout the industry."
However, with the tariffs paused for a few weeks, Robinson said businesses have a chance to prepare for the possibility of a trade war.
"This extension will give local businesses more time to look at what those options are," she said. "Now that we sort of have an insight into what the Canadian retaliatory plan is, it'll give us a little more time to take a look at how that might impact and maybe businesses can make some changes to become a little more prepared."
Efforts to highlight local businesses
In he meantime, Robinson is encouraging people to support local business.
"This is exactly the time to be supporting local businesses, to be shopping local, and we're also going to be helping to profile some of those local businesses and the Canadian products that they offer within their stores," she said. "We're looking forward to shining a spotlight on that.
"We know that not everything that we buy can, you know, come from Canada, but we want to shine a spotlight on all of those Canadian products that are available here at local stores."