Prior to his Inauguration, President Trump communicated his intent to impose 25% across-the-board tariffs on imports from Canada and Mexico as one of his first actions after being sworn into office. In his Inauguration speech earlier this week, the President revealed the creation of an external revenue service to collect tariffs and duties at the border but stopped short of officially imposing tariffs.
President Trump has since repeated his threat to impose 25% tariffs on Canadian-made goods exported to the United States beginning February 1. This now buys Canada some time (although not much) to underscore its trade importance with our southern neighbour. Along with the business community across Manitoba, including our hundreds of members, the Manitoba Chambers of Commerce has been keeping a close eye and ear on the President’s threats that would affect trade with the U.S. While our country’s priority is to avoid tariffs, we must be prepared if they do materialize.
Important Trade Relationship
Canada and the United States share one of the world’s most integrated and mutually dependent trading partnerships. Every day, $3.6 billion in goods crosses the Canada-U.S. border, fueling a $1.3 trillion annual trade relationship.
Here at home, Manitoba’s economy thrives on trade, and the United States is our province’s largest trading partner. Two-way trade between Manitoba and the U.S. is approximately $42 billion, and we export $18 billion worth of goods to the United States every year. About 72% of Manitoba’s total exports go to the U.S., and there are 1,800 companies in Manitoba who export to the U.S.
The High Cost of Tariffs
Tariffs on Canadian-made goods would not only severely harm our unique trading relationship, it would also hurt workers and businesses on both sides of the border, including here in Manitoba. Tariffs would also raise costs for consumers, further compounding affordability problems.
Canada is a critical and reliable partner, supplying energy, critical minerals, autos and other essential inputs for U.S. companies and consumers. Protecting this trade partnership is essential for both countries.
Harmful Ripple Effects
We know businesses are understandably anxious. The threat of possible tariffs has caused uncertainty for business owners across the entire country, including here in Manitoba. Even though tariffs haven’t yet been implemented, the uncertainty can be, and has been, incredibly damaging.
When businesses face uncertainty, they curtail investments into their businesses, they stop hiring, and they pause expansion plans. When businesses find themselves in this state of stagnation, it’s bad for our economy.
According to a recent survey from the Canadian Manufacturers & Exporters, 30% of Canadian manufacturers have delayed investments and 22% have frozen hiring. The harmful ripple effects will continue to grow the longer this uncertainty persists.
Looking at Internal Trade Barriers
From a business lens, we must prioritize reducing internal trade barriers as a means to mitigate the immediate-term fallout from tariffs, in addition to being an important component of Canada’s broader economic strategy.
Restrictions or obstacles that limit the free flow of goods, services, labour, and investments between provinces – including differing environmental standards and inconsistent transportation regulations – increase costs to businesses.
Prioritizing a Unified Voice
Canada’s economic importance to the United States is underappreciated south of the border. Many Americans don’t recognize that Canada is the top export market for the U.S. nationally and for 34 individual states. Manitoba businesses need clear communication and support from government. A unified voice from Canada should be a top priority.
In the meantime, the chamber network is well positioned to provide Manitoba’s business community with up-to-date information on trade, tariffs, and the government’s response. To learn more about Canada-U.S. economic integration and the risks of tariffs, explore the Canadian Chamber of Commerce’s Canada-U.S. Trade Tracker.
Our Voice in the News
Tariff threats and Canada-U.S. trade relations have been frequent topics of conversation and news media here in Manitoba. The Manitoba Chambers of Commerce has been asked to represent the voice of business in Manitoba in several recent local news items, including:
Reacting to Trump’s tariff threats
CTV Morning Live Winnipeg (Jan. 21, 2025)
Manitoba biz community ‘holding their breath’ on Trump tariffs
Winnipeg Free Press (Jan. 20, 2025)
‘We have to get ready for the worst’
Winnipeg Free Press (Jan. 17, 2025)
Manitoba fights for more skilled workers after Ottawa cuts program
Winnipeg Free Press (Jan. 20, 2025)
Trump’s threatened tariffs will plunge Canada into recession, Kinew says
Winnipeg Free Press (Nov. 26, 2024)
Manitoba prepares for the Trump effect
Winnipeg Free Press (Nov. 6, 2024)
Want to hear more about Canada’s evolving economic relationship with the U.S.? Join us on Wednesday, Feb. 5 for our next MBiz Breakfast featuring guest speaker Candace Laing, President & CEO of the Canadian Chamber of Commerce, who will share insights on the evolving landscape of the Canada-U.S. economic relationship, what it means for businesses across Manitoba and Canada, and how and where Canada can shift its priorities to address the threat of tariffs.
Register now for our MBiz Breakfast with Candace Laing.
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