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New tariffs imposed by the United States on Canadian goods are expected to take effect Wednesday, creating uncertainty and concern across multiple industries.
While the immediate impact may be limited, experts have warned that medium- and long-term effects of the tariffs could be significant, particularly for Canada’s automotive sector.
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Business analyst and commentator Paul Martin weighed in on the issue during an appearance on the Evan Bray Show on Tuesday.
Listen to the full interview with Martin:
“If there’s any impact here, it’s going to be medium-term. We don’t have any manufacturing here to speak of in this sector. The target is going to be (components) that go into vehicles. They will attract the tariffs first,” Martin explained.
“It’s complicated, because parts go back and forth, and a car sometimes gets assembled in three or four different places, and so it could attract tariffs at each level.”
The new tariffs are expected to drive up vehicle prices, with estimates ranging from an additional $5,000 to $15,000 per vehicle.
“Who knows what the final number will be, how long it will last – all of those variables are at play,” Martin noted.
“But for those at the retail sector, it will ultimately filter through and the consumer will be paying for it.”
Despite the tariffs being imposed by the American government, Martin highlighted a common misconception about who bears the cost.
“Right now, the tariffs are imposed by Americans on Canadians, which means the Americans get to pay the tax. It’s levied on our stuff that they buy from us, but it’s actually the Americans who pay it. And I think this is one of the confusing points about this,” the analyst explained.
The Canadian government is considering additional retaliatory tariffs, but some argue that such a move could further complicate the economic landscape.
“One of the arguments you hear coming out of Alberta, for example, is that they’ve been reticent to say, ‘We don’t want to have retaliatory tariffs,’” Martin explained.
“There’s one other wrinkle in this, and it’s called export taxes. You could have put an export duty or some kind of a levy on it. This is what Doug Ford did in Ontario for a day with electricity.”
The new tariffs also highlight underlying political and economic tensions within Canada, Martin said.
“One of the threats in all of this is, can Canada hang together?” Martin said.
“The fabric of the Canadian federation is being tested, being stretched, and the seams are being pulled. We’re in the middle of an election campaign, and with the Liberals in the lead, they are going to play to southern Ontario. They really don’t care much about the prairies, because we don’t support them.”
The manufacturing sector is also under scrutiny, with Martin pointing out that global economic trends have already led to a shift in industry priorities.
“One of the lessons in all of this is that some of the biggest and most successful companies – Apple, Amazon, Tesla – aren’t in traditional manufacturing,” Martin said.
“They focus on financial services, software and technology. The push to repatriate manufacturing could drive up costs, leading to resistance from consumers.”
But with the new tariffs set to take effect, businesses and consumers on both sides of the border will be watching closely to see how the situation unfolds.
