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Winnipeg Free Press

Tariffs take a chunk out of Manitoba businesses

Before her eyeglasses could jump from $200 to nearly $500 overnight, Kathy Tran-Riese made a tough decision: pause her Winnipeg company's shipments to the United States. For years, she's imported KayTran Eyewear frames from China before exporting to American customers. The Asian-made glasses are designed for people with low nose bridges. A wrecking ball is poised to hit Tran-Riese's supply chain: U.S. President Donald Trump signed an executive order to further change trade rules, opening all Chinese-origin exports to tariffs. RUTH BONNEVILLE / FREE PRESS Files Kathy Tran-Riese, founder of KayTran Eyewear, says she's had to stop shipments of eyewear to the U.S. as they'd jump from $200 to $500 because of U.S. tariffs on goods of Chinese origin. The de minimis exemption shielded Chinese-origin packages under $800 from a 145 per cent tariff Trump placed on Chinese imports. Trump said he'll remove the exemption on such goods today. It's unclear what tariff the products will face. Already, Manitoba brokerages have seen local e-commerce exports drop off. Roughly 11 per cent of the province's Canadian Federation of Independent Business members import items from China before shipping to the United States. 'I wanted to hold off and see what actually would occur,' Tran-Riese said. '(But) it does appear that something — we don't know how drastic it will be — will occur on May 2.' Earlier this week, she informed customers she'd halt U.S. shipments for the time being. The country accounts for roughly 45 per cent of her sales. Slapping on a 145 per cent duty would more than double the customer's cost. It's 'not fair' to them, Tran-Riese said. 'But at 145 per cent, it makes it impossible for any company to absorb it,' she added. 'They would essentially be losing money on every single (item) that they sold.' She's considered swallowing the duty, depending on what it is. She's looking for a way to get her glasses affordably to American customers, while questioning whether the U.S. is a viable market. 'This has just been … a wakeup call,' Tran-Riese said, adding she hopes to increase Canadian and European sales. Runnin' Red Transport has clocked a decrease in some freight during its travels across the Manitoba-North Dakota border. Shipments from exporters selling Chinese-made goods have 'pretty much stopped,' said Trevor Froese, company co-founder. He began Runnin' Red a decade ago. The company delivers Manitoba businesses' items to the U.S. and brings back Manitobans' U.S. orders. 'If their (exports are) made in China, then it's not going to happen anymore,' Froese said. He's watched some entrepreneurs — sellers on online platform Etsy, for example — close shop due to the rule change. GHY International, a Winnipeg-based brokerage, has tracked a decrease in ocean shipments from China to the U.S. 'We could see an issue if, all of a sudden, China and the U.S. come to some agreement,' said Chris Bachinski, GHY International co-chief executive. He forecasts an increase in container prices as demand surges and businesses look to ship. For now, cross-border semi traffic is down, per the Manitoba Trucking Association. 'Multiple months of this could be very … destructive,' executive director Aaron Dolyniuk said. A couple trucking companies have closed and layoffs have occurred, Dolyniuk said. He declined to name examples. JESSICA LEE / FREE PRESS FILES Trevor Froese, co-founder of Runnin' Red Transport, which has clocked a decrease in some freight during its travels across the Manitoba-North Dakota border. Manitoba is subject to U.S. tariffs of 25 per cent on its steel and aluminum exports, foreign auto contributions and goods not meeting the Canada-United States-Mexico Agreement on trade. Businesses also face Canada's 25 per cent retaliatory tariffs on $59.8 billion worth of goods. Even so, trade volumes have stayed 'very consistent' at GHY International, Bachinski said. 'We have a very resilient group of businesses that are finding ways to keep product moving.' Manitoba businesses might share the tariff cost with an American client, bear the brunt or fully pass it on, depending on the situation. Slowdowns were made up for in earlier months during a 'mad rush' to move product into the U.S. ahead of tariffs, Bachinski said. It's a rush Runnin' Red experienced. Farm equipment and horses were among the items doubling, sometimes tripling, their usual export volume in March. 'There was a lot of panic from some of our customers,' said Froese, who also operates Runnin' Red as a brokerage. Uncertainty and tariff costs continue to plague small businesses, said Tyler Slobogian, a CFIB senior policy analyst. The business advocate estimates firms' input costs will rise 3.5 per cent because of tariffs. Companies who relied on the de minimis exemption for their Chinese-made goods will look at raising prices or eating the surtax, Slobogian stated. 'With higher input costs, the question kind of remains … how much will (businesses) be forced to pass along?' The CFIB is advocating for provinces to reduce interprovincial trade barriers and provide tax relief. The Manitoba government allowed for payment deferrals of the retail sales tax and the health and post-secondary education tax levy, or the payroll tax, from February through April. It led to roughly $840 million of liquidity, a government news release reads. Monday Mornings The latest local business news and a lookahead to the coming week. 'It's welcome for businesses who are looking for some temporary cash flow,' Slobogian said. '(But) it's going to be difficult for many businesses to repay that … when it's due.' GHY International is notifying customers about money they can claim from Ottawa through a remission process, if the firm has been impacted by U.S. levies, Chinese import duties or Canada's countermeasures. Canada's Trade Commissioner Service launched a webpage and step-by-step guide to CUSMA compliance Thursday. Tran-Riese, from KayTran Eyewear, pointed to the 'Buy Canadian' sentiment as an environmental silver lining. It's likely a contributor to the decrease in packages flowing from the U.S. to Canada, added Froese from Runnin' Red. Gabrielle PichéReporter Gabrielle Piché reports on business for the Free Press. She interned at the Free Press and worked for its sister outlet, Canstar Community News, before entering the business beat in 2021. Read more about Gabrielle. 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