As trade barriers increase, industries that rely on exports to the United States will face higher costs, reduced demand, and potential job losses. We will explore which sectors will be hit hardest by these tariffs and the broader economic implications.

Energy Sector

Canada’s energy sector is particularly vulnerable to tariffs due to its deep trade ties with the U.S. The United States imports nearly 20% of its oil from Canada, with Canadian heavy crude supplying two-thirds of Midwest oil refineries and 90% of Rocky Mountain refineries. A 10% tariff on Canadian energy imports could disrupt this balance, leading to reduced export revenues for Canadian producers and higher fuel costs for U.S. consumers.

Automotive Industry

The North American automotive industry is highly integrated, with vehicle components crossing the border multiple times during production. The U.S. imposing a 25% tariff on Canadian auto imports could:

• Increase production costs
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• Disrupt supply chains
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• Lead to plant closures
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• Cause job losses in both countries

In 2023, Canada exported over $110 billion worth of automotive products to the U.S.

These tariffs could significantly reduce demand for Canadian-manufactured vehicles and parts, further straining the industry.

As of today, March 7, 2025, the Trump Administration has paused the 25% tariffs on automotive trade between Canada and USA.

Forestry Products

The softwood lumber dispute between Canada and the U.S. has worsened with the latest round of tariffs. The U.S. increased duties on Canadian lumber from 8.05% to 14.54%, directly impacting:

• Export revenues
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• Profit margins of Canadian lumber companies
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• Employment in forestry-dependent communities

British Columbia, a major exporter of softwood lumber, will be one of the hardest-hit regions.

Minerals and Metals

The U.S. tariffs on Canadian minerals and metals pose another economic challenge. These trade restrictions make Canadian resources less competitive in the American market, leading to:

• Declining exports
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• Revenue losses for Canadian mining companies
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• Potential layoffs in mining regions

A reduction in mineral exports could also discourage investments in mining exploration and development within Canada.

Economic Projections

Financial analysts predict that continued tariffs could drive Canada into a recession within six months.

Projections indicate:

• A 2.5% decline in GDP by early 2026
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• Inflation rising to 7.2% by mid-2025
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• Unemployment increasing to 7.9% by late 2025, equating to approximately 150,000 job losses

Conclusion

The escalating tariffs between the U.S. and Canada pose substantial risks to multiple industries, particularly energy, automotive, forestry, and minerals.

Given the deep economic ties between the two countries, these trade restrictions will not only affect Canadian businesses but also have negative repercussions for U.S. consumers and manufacturers.

A collaborative approach is essential to mitigate economic disruptions and protect the longstanding trade partnership between Canada and the U.S.