Following the return of Canadian negotiators and the implementation of 50 per cent U.S. tariffs, the Canadian business community is assessing the potential impact of these levies.
Various business leaders who export products like plywood and wine and are now subject to these tariffs have expressed concerns about the significant financial strain these high rates will impose, potentially severing ties with the United States.
As these new tariffs take effect, questions arise about their magnitude on the overall economy, the sectors most vulnerable, and the potential repercussions on Canadian employment. Here are the key insights to consider.
Impact on GDP: BMO Predictions
The newly imposed 50 per cent tariffs encompass a range of products amounting to approximately $28 billion in Canadian exports to the U.S.
This accounts for only about five per cent of Canada’s total exports to the U.S., a relatively modest proportion according to BMO senior economist Robert Kavcic.
BMO’s analysis suggests that these tariffs could diminish Canada’s GDP growth by half a percentage point. The hindrance on businesses’ willingness to make new investments, essential for economic expansion, is expected due to the tariff regime.
Furthermore, the timing of these tariffs is unfortunate as Canada’s growth was starting to pick up after a sluggish start to the year, potentially hindering a strong second-quarter rebound.
Industry-Specific Impact
While the national impact might seem limited, certain industries will bear the brunt of the tariffs more severely due to concentrated tariff application.
Robert Kavcic noted that although $28 billion in tariffs is manageable, businesses in industries targeted by the 50 per cent tariffs might face a significant blow, potentially losing access to their U.S. market.
An analysis by CBC of export data from the United States International Trade Commission indicates that electronics and electrical equipment producers will be most affected by the tariffs. In 2025, Canada exported over $4 billion worth of electronic equipment subject to the new tariffs.
Plastics rank second on the list with $3 billion in exports, followed closely by furniture, bedding, and lighting products at $2.5 billion. Industrial machinery and paper products follow closely behind in fourth and fifth place, respectively.
The manufacturing of most electronic products, plastics, and furniture occurs in Ontario and Quebec, making these provinces highly vulnerable to the tariff impact.
British Columbia is also significantly affected due to its high exposure to paper and wood tariffs, as these newly tariffed items represent over 13 per cent of the province’s total exports to the U.S., surpassing other provinces.
Disproportionate Impact on Small Businesses
Aside from major manufacturing sectors, the newly tariffed items encompass various consumer products like honey, candles, and hockey sticks.
These products are likely exported by smaller Canadian businesses and could be easily substituted with American alternatives, potentially exerting a disproportionate impact on these smaller players with limited financial reserves to withstand the challenging economic conditions.
According to the Canadian Federation of Independent Business (CFIB), 40 per cent of its exporting members have products affected by the tariffs, with 35 per cent anticipating a significant revenue decline and 78 per cent acknowledging the loss of competitiveness in the U.S. market.
Dan Kelly, the CFIB president, highlighted that some businesses represented by the CFIB would face severe repercussions and might be forced to cease operations due to the new levies.
Potential Job Losses: Economist’s Analysis
According to a recent analysis by University of Calgary economics professor Trevor Tombe, the new tariffs could lead to tens of thousands of job losses in Canada.
Approximately 52,000 jobs in affected sectors are at risk, with additional losses expected in sectors supporting the impacted industries, such as transportation and bookkeeping services, potentially resulting in a total of 87,000 estimated job losses as per Tombe’s projections.
Tombe emphasized that the indirect exposure to various sectors throughout the Canadian economy implies that job losses could escalate over time.
The repercussions of these job losses will not be limited to Ontario, Quebec, and B.C.
Despite Alberta exporting a small portion of the affected products, it could face around 9,000 job losses due