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With Canadian negotiators back home and 50 per cent U.S. tariffs now in effect, the Canadian business community is taking stock of just how painful these new levies will be.
Individual business leaders who export everything from plywood to wine and are now facing the tariffs have said the high rates will effectively cut off any business with the United States.
But just how big is the blow to the broader economy? Which sectors will feel it the most, and what could it mean for Canadian jobs? Here’s what you need to know.
GDP could lose half a percentage point: BMO
The new 50 per cent tariffs in place cover a range of products — about $28 billion worth of Canadian exports to the U.S.
That’s only about five per cent of Canada’s total exports south of the border, which in the grand scheme of things is pretty limited, said BMO senior economist Robert Kavcic.
BMO estimates the 50 per cent duties could shave half a percentage point off Canada’s GDP growth, in part because the new tariff regime will make businesses wary of new investments that would help grow the economy.
The new tariffs also come at an unfortunate time, when growth in this country just seemed to be rebounding, Kavcic said. Growth was sluggish in the first part of the year, but it has picked up in recent months, paving the way for a strong second-quarter rebound.
‘Your U.S. market could effectively be gone’
Even if the figures and impact seem muted on a Canada-wide level, the pain will be felt acutely in certain industries where tariffs are concentrated.
“$28 billion is a relatively manageable amount,” Kavcic said, but added, “I don’t want to downplay it because if you’re a small or medium-sized business in one of the industries that’s being hit with 50 per cent tariffs, your U.S. market could effectively be gone.”
CBC analysis of export data from the United States International Trade Commission shows that the tariffs will be felt most acutely by producers of electronics and electrical equipment. In 2025, Canada exported more than $4 billion US worth of electronic equipment that would now be subject to these tariffs.
Plastics are second on the list, with $3 billion of these products sent south of the border last year, and furniture, bedding and lighting are close behind with $2.5 billion. Industrial machinery and paper products follow in fourth and fifth place.
Manufacturing of most of those electronic products, plastics and furniture takes place in Ontario and Quebec, meaning those provinces are highly exposed to the new slate of tariffs.
But British Columbia is also impacted in a big way because it is highly exposed to paper and wood tariffs. Newly tariffed items represent more than 13 per cent of the province’s total exports to the U.S., a rate that is higher than any other province.
Outsized impact on smaller businesses
Outside of the major manufacturing sectors, the newly tariffed items include a laundry list of consumer products, including honey, candles and hockey sticks.
“It’s kind of a quirky selection of goods that have not already been covered under various other tariffs put in place so far,” Kavcic said.
These kinds of products would likely be exported by smaller Canadian businesses, according to Kavcic, and might be easy to replace with American options.
That could have an outsized impact on those smaller players, who might not have a lot of spare cash in the bank to help weather these tough times. The Canadian Federation of Independent Business (CFIB) found that 40 per cent of its members who export to the U.S. make and sell something affected by the tariffs.
After Canada-U.S. trade talks broke down, U.S. President Donald Trump hit Canada with 50 per cent tariffs on various items. Analysis from economist Trevor Tombe indicates that if the tariffs last, Canada would shed tens of thousands of jobs.
Among those small and medium-sized business owners, 35 per cent said they expected revenue to fall by at least half because of the tariffs, while 78 per cent said the new tariffs would make their products uncompetitive south of the border.
Dan Kelly, the CFIB’s president, told CBC News over the weekend that some of the businesses he represents would be effectively “done” because of the new levies.
87,000 jobs could be lost: economist
According to a recent analysis by University of Calgary economics professor Trevor Tombe, tens of thousands of jobs could be lost in Canada because of the new tariffs.
Some 52,000 jobs in affected sectors are at stake, he said, but sectors that support tariff-affected industries also face losses. Businesses like trucking or those that provide bookkeeping services would also take a hit, and 35,000 additional jobs could be lost in that ripple effect.
“All of these sectors, basically all throughout the Canadian economy, are indirectly exposed. And so over time, job losses will mount in those sectors as well,” Tombe told CBC News.
In total, that would amount to 87,000 estimated job losses, by Tombe’s calculation.
That also means job losses would be felt outside of Ontario, Quebec and B.C.
Alberta, for example, exports a small portion of the products impacted by the new tariffs, but it could face some 9,000 job losses because it’s home to industries that support exporters, Tombe found.
Uncertainty — the incalculable commodity
Even though most of the direct tariff impacts will be felt in specific provinces and sectors, the tariffs pose one important, Canada-wide risk: uncertainty.
“It’s the uncertainty that’s going to slow the economy much more than the tariffs themselves,” Tombe said.
That’s been a factor since U.S. President Donald Trump’s trade war against Canada began roughly 18 months ago, but the fallout of talks has created a lot more.
Prime Minister Mark Carney has promised “dollar-for-dollar” retaliatory tariffs, but which American products will make that list is still unknown. And with Trump now threatening higher 50 per cent tariffs on Canadian autos and steel in response, the possibility of more products getting pulled into the retaliatory spiral only adds to the uncertainty.
Prime Minister Mark Carney said on Monday that U.S. President Donald Trump is doing what the government suspected by targeting the automotive industry. ‘What message does that send to workers in Michigan, Ohio, Kentucky and Alabama who rely on Canadian demand?’ said Carney.
“The bigger concern [is] that Canada retaliates, and then of course the U.S. is going to retaliate,” BMO’s Kavcic said. “And if the U.S. economy is 10 times the size of Canada, is that a tit-for-tat battle we can actually win? Probably not.”
These talks were also expected to lay the groundwork for broader renegotiations on the Canada-U.S.-Mexico Agreement (CUSMA) — so the failure at this stage has put a cloud over the future of the trade deal.
An Oxford Economics analysis prepared for the Canadian American Business Council earlier this month found that more than 100,000 Canadian jobs could be lost in the event CUSMA was killed and would cost the Canadian economy $271 billion by 2035.
All of that bad blood will likely prove to be a weight for quite some time, Kavcic said, seeing as the Trump administration still has two more years in office and the president’s penchant for tariffs doesn’t seem to be fading.
“I think the attitude out there now is going to be [that] this is a relationship that’s just broken for the foreseeable future,” Kavcic said.
“So if you’re a business, do you hold off on hiring? Maybe. Do you hold off on business investment? Probably, until this clears up.”
