N.B. businesses brace for another impact amidst changing tariff threats

A New Brunswick manufacturer is planning to move to the United States amid the ongoing trade war.

More changes to the U.S.-Canada tariff war has thrown yet another hurdle at local businesses Tuesday afternoon with President Donald Trump threatening that both aluminum and steel will be taxed 50 per cent instead of the original 25.

“I could see it reducing our costs about 5-10 per cent depending. A lot of the aluminum we buy is from Canada so it’s hard to say, but that we could absorb,” said JessEm Tool Company president, Darrin Smith.

He says about 32-35 per cent of its earnings are spent on raw materials and while most of it is aluminum or stainless steel, that is a hit he could afford to take.

However, it’s the 25 per cent tariff that’s expected early April that has him planning to shut down his New Brunswick plant and move it across the border.

“The Canadian market is too small, we’re too specialized, that’s the problem. If you have a big enough market, you can specialize, a market of 41 million people we’d have to make every wood working tool,” he said.

Currently, Smith has plans to visit the States next week to check-out his options and while he doesn’t want to leave, he says if the proposed tariffs come into effect, it will be the only option.

He says over 80 per cent of his sales go to the United States and on average, he’d be looking at $350-400,000 a month in tariffs at the 25 per cent.

“We’ve already got emails from our customers saying they can’t absorb it and they want us to absorb it. We can’t so the orders are cancelled,” he said.

Adding, “25 per cent shuts a company like mine down, there’s no question about it. That’s all there is to it.”

At this point, Smith says neither he or his family wants to move out of New Brunswick, but he is keeping his options open and will move forward quickly depending on what happens.

“I’m hoping it can be fixed before then,” he said.

Just last week the New Brunswick government announced its tariff plans which does include support for local businesses.

“We’ve been hearing from almost every export-based business in New Brunswick and all of them are saying ‘listen we have cost pressures and those are exacerbated by these tariffs that the Trump administration is putting on,” said Luke Randall, the minister responsible for Opportunities New Brunswick.

Overall, he says the plan includes the flexibility for more dollars, resources and the pivoting of programs quickly if needed.

“We can’t anticipate Trump, but we can certainly control what we understand and what we knew was that there may need to be additional measures. We’ve built that into our package already and certainly if we need to put in place even more measures, that will be something that our government is talking about,” he said.

Adding, “I believe that the package that we’ve come up with is flexible enough that no matter what’s happening in the world market we’re going to be able to respond to New Brunswick businesses and that’s what we’re here for.”

He says one of the most important things right now is having New Brunswickers support other New Brunswickers.

“What we desperately need right now is market, we need people buying our products and the ability to buy from a neighbour may mean that they can scale to a size where they can export to a new market, so right now, if you want to help your neighbour, buy New Brunswick,” he said.

As for Smith, he says the supports being offered by both the provincial and federal government just wouldn’t be enough to compete with the tariffs imposed by the United States.

“Their economy is 13-times bigger than us, fighting them doesn’t make a lot of sense to me,” he said.

“I think we need to figure out how to make it work. Just because of geography. We have no choice. Europe’s not going to be the answer. Asia’s not going to be the answer.”

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