MNI INTERVIEW: Canada Already Chilled By Trump Tariff Threat
MNI (OTTAWA) - Canadian firms are already holding back investment and hiring until they see if Donald Trump follows through on threats of a 25% tariff, the CEO of industrial equipment supplier Wajax told MNI, adding he expects trade penalties will be diluted to avoid raising prices for American households.
“It is a little bit scary and we don’t really know where it’s going to hit,” Iggy Domagalski said in an interview Friday. “It will probably be more targeted, and where it actually lands, that’s really the question.”
“Folks are pausing hiring and investment decisions until they know what’s happening,” Domagalski said. He referenced the potential to target industries such as dairy, metals, autos and lumber that have been mentioned by Trump as irritants, while noting the United States wants to maintain access to Canada's energy.
The U.S. president-elect says he's prepared to impose tariffs almost immediately after he's sworn in Monday and Canadian officials have said they are prepared to retaliate. Canada sends three-quarters of its exports to the United States and Trump has said the surplus in goods trade amounts to a subsidy, while also suggesting his real concern is border security and Canada meeting its NATO spending target.
“A 25% tariff just across the board on everything is unlikely, especially oil. He just needs that stuff so just to tax it would be really painful for his American citizens," Domagalski said. "Raising the price at the pump is a disaster for any leader.”
Prime Minister Justin Trudeau indicated this week he could restrict oil shipments if Trump tries to exempt them, meaning some Americans could see pump prices jump as much as 75 cents per gallon.
THE NEGOTIATOR-ELECT
Canada's best bet is seeing if Trump wants to quickly cut a deal ahead of G7 meetings in Alberta this year or next year's revisiting of the USMCA agreement, Domagalski said. “Try to keep the relations with America as good as possible, and if and when these tariffs do come which could be very quick, do our best to make sure that they are on as few things as possible, and that they go away as quick as possible, which is how many folks think it will likely roll out,” he said. (See: MNI INTERVIEW: Canada Must Avoid US Trade War- Factory Group)
Prolonged trade fights risk Canada losing production shifts or entire facilities in sectors such as autos, Domagalski said. Canadian officials should find ways to boost long-term competitiveness even with an election coming this year, he added. (See: MNI INTERVIEW: Trudeau Cabinet Disarray Fuels Trump Trade Risk)
Wajax started as a Montreal blacksmith shop in 1858 about a decade before Canada was founded, and today sells equipment to industries such as construction, forestry, mining, and energy. While lower interest rates have allowed equipment makers to offer some zero-rate loans, inventories have built up as firms caught up with shortages during the pandemic, Domagalski said. Hiring has also become easier in a time where unemployment has crept up, he said.