Ontario industry still anxious over potential 'devastating' impact of Trump tariffs, despite reprieve

CBC

07-02-2025

For Ontario farmers relieved by the pause of U.S. tariffs on Canadian goods, there still remains significant anxiety over planning for the rest of this year's season and into the next.
"Really the challenge is around the uncertainty," said Drew Spoelstra, a Binbrook, Ont., farmer and president of the Ontario Federation of Agriculture.
The province's agriculture industry exports meat and other animal products, livestock and most of its greenhouse produce to the U.S.
"When we don't know what our markets are going to be in July or September, it is difficult to plan ahead and keep our operations as well thought out as possible."
And if the tariffs eventually do go through?
"If these products ultimately stop moving because of the affordability of those things in the United States, that's going to have a devastating impact to our farmers here in Ontario," Spoelstra said.
Tariff threat still hanging over Canada
Earlier this week, U.S. President Donald Trump dropped his plan to levy tariffs on Canada for at least 30 days after Prime Minister Justin Trudeau made a series of commitments to improve border security.
But the threat of economic havoc still hangs over Canada and, in particular, Ontario, which ranks third in the world for U.S. imports and will be significantly impacted if the 25 per cent tariffs do come into effect.
Last month, Ontario Premier Doug Ford said tariffs from the U.S. could cost up to 500,000 Ontario jobs.
Of the six top Canadian industries exporting to the U.S., Ontario is the leader in two — auto manufacturing and agriculture. But it also exports billions of dollars of products in oil and gas refining, aluminum production and processing and aerospace industries. In 2023, more than 80 per cent of Ontario imports went to the U.S.
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"Nobody should be breathing a sigh of relief," Lana Payne, national president of Unifor, which represents Canadian auto workers, said recently to The Canadian Press.
"The problem is the threat of the tariffs is still there and this is going to carry on, and it's damaging to our economy. It's damaging to investment in our country, and it's damaging to Canadian workers," she said.
60% of agriculture imports to U.S.
For agriculture, 60 per cent of the industry's products go to the U.S, which, according to 2023 Statistics Canada data, is worth roughly, $4.7 billion dollars.
"We're seeing a lot of our pork and beef products as well as live cattle and hogs exported to states. And then all of that stuff is brought back here and in the processed form," Spoelstra said.
" We just don't have the processing capacity here to deal with a lot of those products."
Greenhouse growers, specifically, export about $1.8 billion in produce, with Ontario representing about $1.6 billion of that total, or 85 per cent of all produce, according to Richard Lee, executive director for the Ontario Greenhouse Vegetable Growers.
Around 503 million kilograms of products are produced a year, which equates to about 300 trailer truckloads leaving farms daily, with 200 of them headed to the United States, he said.
"So if tariffs were implemented overnight, that would cause a catastrophe to the border crossing," Lee said.
Lee says the tariffs will likely add an additional cost to the end consumer of about $475 million.
"That's something the supply chain cannot absorb," he said. "We are in a situation where the margins are already pretty tight."
As well, for the crops that are currently in production, like tomatoes, cucumbers and peppers, farmers can't just turn off the switch, he added.
'Blow to Ontario producers'
"This product is ready to go and when it's ready to go, we have to harvest it," he said. "If not, there'll be substantial losses incurred."
"So it would be a significant impact and [a] blow to Ontario producers."
Lee said the industry could brave the storm for a month, perhaps, but that he doesn't see the sustainability if tariffs last past that time period.
But the forecast may be even more dire for the auto industry, which some analysts predict could crater within a week, should 25 per cent tariffs be applied.
In a normal year, according to Flavio Volpe, president of the Automotive Parts Manufacturers' Association, about 80 per cent of of vehicles made in Canada — almost all from Ontario —are exported to the U.S. It's about $53 billion worth of exports.
But tariffs will mean an enormous increase to the cost of manufacturing a vehicle, Linda Hasenfratz, executive chair of Linamar Corp, a Guelph, Ont.-based auto parts manufacturer, recently told CNBC.
"And our customers are going to be forced to decide can they absorb it? Which I think the answer is no."
'Grind to a halt'
"I suspect there will be pushback," said Hasenfratz. " Demand will cease and hence my prediction that we're going to see automotive production grind to a halt just as soon as inventories run out, which won't take long."
Just how long it would take would depends on the vehicle platform and how much inventory in house of various supplied components, Hasenfratz explained.
"Where they're shortest in supply ... that's going to be the time frame. it could be a week, it could be two weeks. It depends on the level of inventory. But the industry tends to run on low levels of inventories. So I imagine it'll be quite soon," she said.
Volpe, in a recent interview with CBC's The Current, said car makers would be telling their suppliers, who operate in a five to 10 per cent profit margin, that they have to eat the costs.
"How many days are you going to schedule production where you're losing hundreds of thousands or ... millions a day," he said.
"It makes more sense to shut down, regroup like all of the industry did in the first week of the pandemic."
Volpe was asked whether assembly lines in Ontario cities could be shut down within a week of a 25 per cent tariff being imposed. He said, "the answer is yes," along with assembly plants in some other cities in the U.S because they're all intertwined.
The steel in industry of Ontario, which produces 70 to 80 per cent of all steel made in Canada, would also take a major hit, said Francois Demaris, vice president, trade and industry affairs at the Canadian Steel Producers Association.
For the production of steel, materials crisscross the U.S.-Canada border. Components like iron ore, coal and coke needed for steel production are often imported from the U.S. and used to make steel at places like ArcelorMittal Dofasco or Stelco, both in Hamilton. That steel is then shipped to the U.S.
"We cannot diversify and go elsewhere," Demaris said.
Ontario would be disproportionately impacted by tariffs, as six of Canada's 13 steel plants operate in the province, according to Natural Resources Canada