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John McLaughlin says his Winnipeg business will take a serious hit if 50 per cent tariffs on Canadian exports threatened by U.S. President Donald Trump come into effect.
“The tariffs at a 50 per cent rate pretty much eliminates our ability to be competitive in the U.S. markets,” said McLaughlin, the vice-president of operations at Foampak, which manufactures expanded polyethylene foam.
“It’s already a competitive industry, and it’s not an option to increase our prices by 50 per cent.”
Trump has threatened to impose 50 per cent tariffs on a wide range of Canadian exports, ramping up his trade war. The U.S. administration has said the tariffs, set to come into effect Aug. 19, are in response to discrimination against U.S. motor vehicles, dairy and alcohol.
McLaughlin, whose company makes products like flooring underlay, packaging and wrapping applications, estimates roughly half of its business goes to the U.S. He expects Foampak will lose those customers if the tariffs go through.
“There isn’t a lot we can do to cover off a 50 per cent price increase. There’s nothing internal that can cover off a tariff of that size,” he said.
McLaughlin said if tariffs drive up the price, Foampak would have to consider moving its manufacturing to the U.S., closing or downsizing, all of which would result in job losses.
“Fifty per cent is far too much for us to absorb.”
Canadian Manufacturers & Exporters chief economist Alan Arcand says he’s disappointed the sector is being targeted by U.S. trade tariffs again. (Zoom)
Alan Arcand, the chief economist with the industry association Canadian Manufacturers & Exporters, said he’s disappointed the sector is being targeted by U.S. trade tariffs again, following a series of other general and sector-specific tariffs on Canadian goods.
The tariffs don’t make sense since the North American manufacturing industry builds things together, he said.
“Not only is the direct impact [of tariffs] damaging the industry, but the uncertainty of the constantly shifting trade announcements, tariff announcements, are also damaging the industry, making it hard for manufacturers to plan,” said Arcand.
He said the industry represents about nine per cent of Manitoba’s economic activity. It exported about $13 billion worth of goods last year, and it employs more than 70,000 people, he said.
“The industry settled into the … tariffs that we were hit with last year, and we weren’t expecting another part of the industry to be hit. So they’re still weighing the impact,” said Arcand.
“We still have [a few weeks] or so to try to solve this issue before those tariffs are put in place.”
Arcand hopes all levels of government will provide support to help the industry navigate the trade war.
‘Not getting too worried’ — yet
Golf equipment is on the list of Canadian goods Trump is now targeting, making Bayco Golf another Winnipeg business that could feel the squeeze. It sells golf course accessories like tee markers, flags and golf ball washers.
General manager Andrew Hunt said Bayco will wait and see what happens before getting overly concerned.
Winnipeg business Bayco Golf makes accessories like this golf ball washer. General manager Andrew Hunt says although golf equipment could be subject to U.S. tariffs as of Aug. 19, the business isn’t too worried yet. (Mike Arsenault/CBC)
“[Tariffs] are a changing thing. I feel like it changes every day almost, so we’re not getting too worried about it yet,” he said.
“But it definitely would affect our business going forward.”
Hunt said about 40 per cent of Bayco Golf’s sales are in the U.S., and some of its customers are trying to get orders in now before the price goes up.
“A couple of our bigger customers, they’ve placed bigger stocking orders now, and they want them to ship by Aug. 17 just in case [tariffs] go through.”
But Hunt said Bayco also does business all over the world, and right now is talking with potential customers in Australia and South Africa to try to diversify its sales base.