Trump flip flops costing Canadian companies millions

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United States President Donald Trump’s on-again, off-again tariff threats are costing some Canadian companies hundreds of thousands of dollars even before they pay a dime to actually trade goods, according to experts, and that’s before the cost of deals and investments stalled by months of uncertainty.

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“It’s certainly in the tens of thousands of dollars for some companies and hundreds of thousands of dollars for others when you factor in employee time and consultants (such as) lobbyists, customs brokers, trade lawyers and accountants,” William Pellerin, a partner in the international trade group at law firm McMillan LLP, said. “And the opportunity costs of deals and trades that are not happening are likely staggering.”

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On Tuesday, Trump imposed 25 cent tariffs on Canada and Mexico, its largest trading partners, after threatening to do so for months.

A day later, he carved out the automotive industry for a reprieve on the tariffs, and then he said on Thursday he was suspending tariffs until April 2 on goods brought into the U.S. under the Canada-U.S-Mexico Agreement (CUSMA).

Avery Shenfeld, chief economist at CIBC Capital Markets, said any delays in major investment decisions by Canadian companies amid the tariff uncertainty are a “soft” cost that looms very large compared to others.

“That puts the ice on jobs in engineering, construction, machinery and other parts of the economy that are tied to capital spending,” he said.

The disruption of trade flows caused by tariffs will be a major cost to the economy, he said, but the constant imposition and reversal of the levies — not to mention the affected country’s response to them — is making the amount difficult to predict.

On a day-to-day practical level, the flip-flopping and exclusion of some categories are enormously difficult for affected businesses to cope with, Jon Levin, a partner at Fasken Martineau DuMoulin LLP, said.

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“Aside from very significant compliance costs, (there are) border delays as confused customs officials try to keep up with the rapidly changing regime,” he said.

Kyle Feigenbaum, co-founder and chief executive of Healthybud Corp., which manufactures and sells pet food on both sides of the Canada-U.S. border, said he had to spend three times his usual trucking costs to rush product from British Columbia to California this week ahead of $10,000 in expected tariffs, only to find out Thursday the tariffs were off the table — for now. 

“The constant back-and-forth on tariffs is making it impossible to plan as a business owner,” he said, adding that he also has to try to anticipate the impact of potential Canadian counter-tariffs on the freeze-dried products his company manufactures in the U.S. “It’s out of our control and makes it nearly impossible to properly manage our business.”

Matthew Holmes, chief of public policy at the Canadian Chamber of Commerce, which sent a delegation to Washington, D.C., this week to help secure supply chains, said the effects of the uncertainty are widespread and can be seen in delayed business investments, shaky consumer confidence, stalled capital flows and a volatile stock market.

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“The latest delay will mitigate some of the damage to the economy from tariffs, but the constant threats and economic uncertainty have already taken a toll,” he said. “The only outcome that makes sense for both economies is for all tariffs to be taken off the table without exception.”

Andrew DiCapua, principal economist at the Canadian Chamber, said the trade brinksmanship is forcing some companies to bear costs they can ill afford, particularly if they should be spending money to explore new trade prospects that would diversify their customer base and mean less reliance on U.S. customers.

“The added cost of spending time on compliance — time that could otherwise be invested in business growth — is a hidden cost that may well prove to be a make-or-break situation for some businesses operating on thin margins,” he said.

• Email: bshecter@nationalpost.com

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