U.S. President Donald Trump imposed sweeping 25 per cent tariffs on Canadian steel and aluminum Wednesday—a policy now threatening the bottom lines of several Calgary businesses and driving up the price on a wide range of consumer goods.
Canada hit back with reciprocal tariffs, targeting C$29.8 billion worth of American goods.
“We will not back down,” Foreign Affairs Minister Mélanie Joly said Wednesday.
The news is particularly concerning in Calgary, where metal fabricators are scrambling to adapt to ongoing and ever-changing political moves.
“It makes you nervous and uncomfortable,” said Chad Spicer, general manager at All Metal Manufacturing.
“Trying to figure out what your pricing is going to be for customers as you do quotes is really hard right now because these tariffs keep changing, and you don’t know what the price of the material is going to be at the end.”
Spicer says 80 to 90 per cent of the steel and aluminum materials he fabricates in Calgary comes from the United States.
His team currently has contracts with several American hydrovac companies, but a 25 per cent hit to the price of materials is putting pressure on his finances.
“This could hit us really hard, so to prepare for this, we probably ordered about eight months' worth of steel (about 365,000 kg) that we had to pay for in cash,” he said.
“It hurts your capital, but I’d rather pay a big amount now than pay 25 per cent or even 50 per cent more later.
“We’re a supplier to most of the hydrovac companies in North America, so this does run up our costs.”
Meanwhile, other companies like Metalworks Canada are also making adjustments, even though just a small portion of the steel and aluminum they purchase comes from south of the border.
“It’s going to cause some increase in certain areas,” said CEO George Waldner.
“We did cancel our American products that we were initially looking at purchasing earlier in the year because of the tariff threats and due to long delivery times.
“We have mostly loose components, like silicones, fasteners and vents, that we purchase out of the U.S., whereas now we are looking at alternative suppliers or, in some cases, manufacturing them ourselves.”
Waldner says some of his products may also run out of stock because of the tariff threats.
Other companies are facing the threat of having to put entire projects on hold.
Greg Carter, owner of Phoenix Metals Calgary, says extreme uncertainty is making his team think twice about how to proceed.
“Some of the projects we’re working on right now, they might actually become on hold because it’s going to be a 25 or 50 per cent extra higher cost for these owners to pay,” he said.
“So that’s the kind of crazy uncertainty of where were at right now.”
Higher prices and economic concerns
Trevor Tombe, professor of economics at the University of Calgary, notes the total exports subject to these recent tariffs represent just one per cent of overall economic activity, but if they last an extended length of time, there could be highly negative impacts.
“Aluminum and steel, they’re inputs into the production of many other goods and services right across the economy, and these tariffs between Canada and the United States on an important input would mean that businesses might have to find alternative suppliers,” Tombe said.
“That means they might have to raise prices to cover the higher costs, and many firms might even have challenges maintaining their current level of output.
“So, if these tariffs last a while, then it can hurt Canada’s economic growth and productivity.”
Tombe estimates an increase in consumer prices in Canada of about 0.6 per cent, but that could go much higher for items, like furniture, mostly imported from the United States.
“These are large numbers relative to the two per cent target inflation rate, so if we go from two to 2.6, that’s a pretty meaningful change, and the retaliation that we announced in response to steel and aluminum is roughly that large.”
Tombe also pointed to consumer activity, which could change as a result of the uncertainty and continuous flip-flopping of tariff threats imposed on both sides of the border.
“Uncertainty is way higher in Canada’s economy now than it was last year, for the simple reason that the policy environment that businesses are operating in, especially export-oriented businesses, is completely unpredictable,” he said.
“So, a firm thinking about making an investment will probably and prudently think twice, and that will mean lower business investment, and that will mean higher unemployment.
“So, when uncertainty is as high as it is now, unemployment rises, investment falls, growth suffers and that occurs whether tariffs happen or not, and it’s been potentially quite large.”
