Ottawa-Gatineau better positioned to withstand U.S. tariffs, but times uncertain for export-reliant businesses

U.S. tariffs on steel and aluminum would be stacked on top of other Canada-wide tariffs. CTV’s Austin Lee has the local reaction to the growing trade war.

With U.S. President Donald Trump announcing tariffs on Canadian steel and aluminum, a new study suggests the National Capital Region is well-positioned to weather a trade war, should it come to it.

On Tuesday, a White House official said Trump’s planned 25 per cent tariffs on steel and aluminum imports, set to go into place on March 12, would be stacked on top of other levies on Canadian goods, which could go into effect March 4.

That would translate to a total 50 per cent tariff on steel and aluminum coming from Canada.

The Canadian Chamber of Commerce says Canada and the U.S. have built a highly integrated and mutually-beneficial economic relationship over more than a century, but Trump’s tariff plans could cause significant economic problems for both Canadians and Americans — potentially even causing a recession.

Looking at the economies of 41 of Canada’s cities, a new study found that Ottawa ranks below many other parts of Canada that rely more heavily on exports to the U.S., at 29th out of 41. Saint John, N.B., Calgary, Alta. and Windsor, Ont. were the top three cities in Canada that were the most vulnerable to the impact of tariffs from the U.S.

While the overall picture of Ottawa-Gatineau is better than others, businesses that rely on the highly integrated Canada-U.S. supply chain are facing economic uncertainty that is reminiscent of the pandemic.

Lee Valley Tools is one such business waiting with bated breath to see what the Canada-U.S. trade will look like moving forward.

“Most organizations are built around stable policy. So, it’s reminiscent of COVID where we’re just tracking the changes by the hour,” said Jason Tasse, President and COO of Lee Valley Tools.

“The message to our employees is, our focus is job security and protecting the business and to our consumers, we’re going to do whatever we can to contain the costs.”

Lee Valley Tools was founded in Ottawa in 1978 and has since grown to include a tool manufacturing arm, under the brand Veritas Tools.

Tasse says about 20 per cent of the company’s mail orders come from the U.S., and if the Canadian government fires back with reciprocal tariffs on American steel and aluminum, the Ottawa-based company would be hit on both sides of the border.

“We have two suppliers in the United States that are very specialty and cast ductile iron and proprietary steel. So, it’s not a quick response for us,” said Tasse.

“We’re a little concerned about what’s going to happen in the next few days. Surely the Canadian government is going to respond, as they should, and again, our manufacturing and retail would be impacted. Prior to two weeks ago, you know, we were very proud to be part of North American manufacturing.”

Speaking at an international AI summit in Paris on Tuesday, Justin Trudeau responded to U.S. President Donald Trump’s latest tariffs on steel and aluminum.

“Tariffs on Canadian steel and aluminum would be entirely unjustified,” he said.

When asked whether Canada would consider retaliatory tariffs, Trudeau told reporters he hopes to avoid the latest levies altogether.

“If it comes to that, our response, of course, will be firm and clear. We will stand up for Canadian workers. We will stand up for Canadian industries,” said Trudeau.

According to the United Steelworkers Union, 94 per cent of Canadian steel production is sent to the U.S.

“American manufacturers rely heavily on Canadian steel to run their operations,” reads part of a statement issued by the union.

“The USW will continue to push all levels of government to take decisive action, defend Canadian workers, and ensure that these tariffs do not undermine the future of our steel and aluminum industries.”

When it comes to aluminum, the latest figures from Natural Resources Canada has that figure at 92 per cent. That’s based on annual totals from 2022.

--With files from The Canadian Press