TORONTO – Corporate Canada and a slew of industries fuelling the country’s economy are decrying U.S. President Donald Trump’s incoming tariffs, warning they will not just increase the cost of doing business but also weigh on everyday life.
Associations representing everyone from farmers and miners to homebuilders and restaurant owners spent Sunday speaking out against the tariffs — 25 per cent on Canadian goods and 10 per cent on energy — which are both slated to take effect Tuesday, when Canada’s own package of retaliatory tariffs starts to kick in.
Canada’s retaliation, announced Saturday, will begin by targeting $30 billion in U.S goods on Tuesday, followed by $125 billion in additional duties on American products in 21 days.
“The (U.S.’s) move is reckless and will cause economic hardship in both the U.S. and Canada,” Richard Lyall, president of the Residential Construction Council of Ontario, said in a statement Sunday.
“Our countries and supply chains are intertwined and dependent on each other, so nobody wins in a tariff war.”
His feelings were echoed from coast to coast as business groups reckoned with the reality that the forthcoming tariffs are so broad they could transform nearly every aspect of the Canadian lifestyle.
Business analysts warned the duties will likely depress the Canadian dollar, push up inflation and require an aggressive series of interest rate cuts as the country works to make it cheaper to borrow cash to keep the economy ticking.
“Trump’s tariff hammer will come down hard on Canada’s economy,” Douglas Porter, a chief economist with BMO Capital Markets, wrote in a Sunday note.
“If the announced tariffs remain in place for one year, the economy would face the risk of a modest recession. A couple quarters of contraction are well within the realm of possibility.”
He predicted the Bank of Canada will carry out a quarter-point interest rate drop with each announcement, bringing the benchmark rate to 1.50 per cent in October — lower than previous forecasts.
That forecast was based on BMO calculations showing the tariffs will reduce real GDP growth to roughly zero in 2025, reflecting decreased demand for Canadian exports to the U.S.
Meanwhile, Tu Nguyen, an economist with RSM Canada, forecast the tariffs would take inflation from its current two per cent level to a 2.7 per cent headline number as businesses pass on the cost of increased duties to customers.
As for the loonie, she believes it will slide some more, bringing it even further below its current level, which hearkens back to the early days of the COVID-19 pandemic.
“The depreciation of the Canadian dollar could mitigate the prices of exports for U.S. importers, but this exacerbates the pain for Canadian businesses and consumers,” she told investors in a note.
The economists and several business associations both seemed to agree the promised tariffs are much more significant than the 25 per cent duty on Canadian steel and 10 per cent on aluminum the Trump administration applied in March 2018.
RESCON president Lyall said these tariffs will hike costs and cause a further slowdown in residential construction, which will “exacerbate an already dire housing affordability crisis.”
Canadian Chamber of Commerce president Candace Laing saw the impact as being even more broad. She said the incoming tariffs are “profoundly disturbing” and “will drastically increase the cost of everything for everyone,” hurting families, communities and businesses.
The Canadian Chamber has estimated that a 25 per cent tariff across the board could cost Canadian households an average of $1,900 per year.
That number could grow if Trump makes good on his promise to intensify his actions, should Canada retaliate, which it plans to do.
The $30 billion basket of items Canada is first targeting includes plenty of everyday goods like meat and milk but also household staples like carpets and curtains. If the U.S. doesn’t let up, Canada will follow up its first round of tariffs with $125 billion in duties on other American products in 21 days.
With fruits and vegetables like raspberries, peppers and cucumbers making the first round of tariffs, the Canadian Federation of Agriculture said it was concerned about how the more than 190,000 family farms it represents will be impacted.
The agriculture sectors in Canada and the U.S. rely on each other to buy and sell one another’s products and the fertilizer used to grow food, said the CFA’s president Keith Currie in a statement.
“No one wins in a trade dispute between Canada and the U.S. except for our competitors around the world,” said Currie, adding tariffs are simply “bad business.”
With many dining establishments still coping with debt and inflation stemming from the health crisis, Kelly Higginson, Restaurants Canada’s president and CEO, said the industry may need assistance to get through a tariff feud.
The said the industry is valued at $120 billion and is Canada’s fourth largest employer, and is vulnerable in part because it has yet to recover from the COVID-19 pandemic.
“If the trade dispute results in major and sudden job loss, we urge the government to prioritize job retention through wage support, like it did during COVID,” Higginson said in a statement.
This report by The Canadian Press was first published Feb. 2, 2025.
