The recent announcement by U.S. President-elect Donald Trump regarding a proposed 25% tariff on Canadian goods has sparked widespread reactions across Canada.
Though still in the proposal stage, these measures have the potential to disrupt trade relations between the two countries and significantly impact the trucking industry.
A Crucial Trade Dependency
Every day, approximately $3.6 billion worth of goods and services cross the Canada-U.S. border. Trucking plays a pivotal role in this exchange, connecting producers and consumers on both sides. A 25% tariff increase would make Canadian products less competitive in the U.S. market, raising costs for businesses and likely reducing demand for cross-border trucking services.
Direct Economic Impacts
The proposed tariffs could lead to a decline in contracts tied to exports to the United States. Industries such as automotive manufacturing, where Canadian-made parts are shipped to the U.S. for assembly, would face severe repercussions. Flavio Volpe, President of the Automotive Parts Manufacturers’ Association, warns that these tariffs would harm both Canadian and American businesses due to the deeply integrated nature of supply chains.
Varied Provincial Responses
Provincial leaders have expressed strong opposition to the proposed tariffs. Ontario Premier Doug Ford called them “the greatest threat we’ve ever faced” and denounced comparisons between Canada and Mexico as “insulting.” The tariffs also target Mexico, with a 25% increase, while a 10% hike is proposed for imports from China. Quebec Premier François Legault highlighted the potential impact on thousands of jobs and urged proactive efforts to prevent a trade conflict.
Implications for Energy, Oil, and Trucking
Strategic sectors such as energy could also feel the ripple effects. Canada supplies about 60% of the crude oil imported by the U.S., fueling American refineries directly. Additionally, Canadian electricity accounts for roughly 85% of U.S. imports, particularly in regions like New England and the Midwest, which rely heavily on Canadian hydroelectricity. Higher tariffs could lead to increased costs for American refineries and consumers, disrupting supply chains.
The trucking industry would face equally significant challenges. Truckers facilitate much of the cross-border trade, transporting critical goods such as automotive parts, lumber, and food products. Reduced demand due to elevated tariffs could result in financial losses for trucking companies and job cuts in an industry heavily reliant on seamless trade with the U.S.
Uncertain Yet Negotiable Context
Some analysts suggest these tariff threats may be a negotiation tactic. Flavio Volpe notes that Trump often uses such announcements to compel discussions. This perspective leaves room for hope that tensions could be eased before the measures take effect.
A Call Between Trudeau and Trump
During a phone call with Canadian Prime Minister Justin Trudeau, Donald Trump reiterated his intent to impose the tariffs, citing illegal immigration and drug trafficking—particularly fentanyl—as justification. He emphasized that these tariffs would remain until concrete actions are taken to address these issues.
Trump also expressed his willingness to collaborate with Canada to enhance border security and trade relations, while urging stricter measures to control immigration and drug trafficking.
Set to take office as U.S. President in January 2025, following his electoral victory with 312 electoral votes, Trump’s proposed tariffs promise to be a contentious issue as both nations navigate this evolving trade landscape.
