Mistrust, concern and confusion: Reactions to Trump’s latest tariffs

Trump issues sweeping tariffs but does not include Canada and Mexico on the list.

Political, industry and financial leaders across the globe were again on tenterhooks on Wednesday, waiting to hear what the latest round of U.S. President Donald Trump would include and how much they would be.

In the end, Quebec and Canada will be largely exempt from the sweeping reciprocal tariffs for the moment, but 25 per cent tariffs on some Canadian products, notably in the auto sector, are in effect at midnight.

Tariffs remain on steel and aluminum as well.

• Get the latest on the Trump Tariffs

Premier François Legault said he, along with the other Canadian premiers, will meet with Prime Minister Mark Carney today to discuss Trump’s announcement, and Legault will address Quebecers after.

Athritis effect on auto industry

Canadian Automobile Dealers Association chief economist Charles Bernard said his industry knew it would be a target of tariffs as it has been since Trump came into office.

The tariffs on the auto, steel and aluminum industries, he said, will affect entire supply chains and have a snowball effect on prices, supplies and production.

He compared the tariffs’ effects on the industry to “arthritis” in the human body.

“I always look at trade disruptors, it’s not necessarily a knife ending but it slows our ability to be flexible,” said Bernard. “That’s why you have a lot of representatives in Canada saying it will have an effect on factories to produce at the level they’d like to and when production goes down, variety of units slows down and then consumers are facing less products and their more expensive. It’s sort of a rolling ball effect.”

The majority of Canadian auto manufacturers are in Ontario, whereas Quebec makes parts and other supplies, as well as raw material such as aluminum.

The tariffs will likely be felt throughout the entire industry.

• READ MORE: How Trump’s tariffs could impact used car sales, auto parts

The supply chains are so tightly connected, Bernard said, that even if it seems like the industry can absorb a disruption in one portion of the line, pressure will actually be felt throughout the whole system.

“[For example] 60 per cent of aluminum used for cars in the U.S. is from Quebec, so if you have a contraction of that sector, that also means a contraction of that demand stream for those companies,” said Bernard. “It’s an economy that’s been thought of for optimizing their supply chains and production chains among the comparative advantages of these three countries, and when you add tariffs you go against that grain and the effects are major.”

Mistrust of U.S.

Tom Creary runs the consultancy firm Westbridge One out of Montreal and works with both American entrepreneurs looking to set up shop in Canada, as well as Canadian companies looking to do business south of the border.

His clients have been actively planning since Trump’s reelection in November and his talk of tariffs.

Some of his clients have already shipped the majority of their products to the States to avoid any tariffs in the short term, while others are looking for ways to avoid the American market altogether.

“Basically, their attitude is that we can trust the American market anymore and so we have to protect ourselves,” he said. “We have customers down there, we’re going to do the best to serve them, but in terms of the long-term future, we can’t depend on the United States. It’s foolhardy, and so they’re looking elsewhere.”

Many American businesses, he said, are saying they will find it difficult to continue buying from Canada with tariffs.

Others are apologetic.

“People can’t believe that this is going on,” said Creary. “They said, ‘he’s just bluffing. He won’t do this. It’ll be disastrous for everybody. It can’t possibly be.’ And now they’re seeing it’s real and quite surprising. As much to Americans that I deal with as Canadians.”

Response

Before Trump’s address, Carney met with business and union leaders involved in the Canada-U.S. Relations Council. He then met with his cabinet before he will mee the premiers tomorrow.

“He has preserved a number of important elements of our relationship — the commercial relationship between Canada and the United States, but the fentanyl tariffs still remain in place, as do the tariffs for steel and aluminum,” he said before heading into his cabinet meeting.

“As of this evening, the tariffs on automobiles will enter into force, and the U.S. has signalled that there will be additional tariffs in so-called strategic sectors, pharmaceuticals, lumber and semiconductors.”

He also said, adding Canada will “fight these tariffs with countermeasures.”

Quebec Chambers of Commerce Federation president Veronique Proulx said there are concerns about Canada’s response.

“The export tariffs are hurting our companies who are exporting, but the counter tariffs are really the ones that can really harm our SMEs (small businesses),” she said. “We’ve been asking Carney and the Canadian government to not go to a dollar-to-dollar tariff tomorrow should they go forward. We really need to avoid taxing these products.”