Companies preparing for tariff turbulence as U.S. set to announce latest round​on April 2, 2025 at 7:35 pm

Impending U.S. tariffs have pushed Canadian companies to stockpile goods, cut back staff, put projects on hold and whatever else they think will help them survive the economic turmoil ahead.

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U.S. President Donald Trump has set Wednesday as the day he will unveil his administration’s latest tariffs on numerous countries, but hours before the announcement, there was still little indication on their potential scale or scope.

The U.S. already hit Canada and Mexico with 25 per cent levies on steel and aluminum on March 12. In early March, the U.S. also went ahead with blanket tariffs on Canadian goods, only to lift it shortly after for the auto sector and then for all goods compliant with the North American free trade pact, but those exemptions are set to expire with the pending tariffs.

For industries that rely on exports to the U.S., tariffs could be a major hit as customers south of the border may choose to buy fewer goods or switch to U.S. alternatives.

The threats, and the uncertainty that has come with them, have forced all sorts of company responses, ranging from businesses rolling out advertising to emphasize their Canadian ties, looking to secure new suppliers, and holding off on providing financial forecasts because of the huge uncertainty.

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Many responses have meant preparing for lower demand, from Pantyhose-maker Sheertex laying off 40 per cent of its staff citing the tariff threat, to airlines cutting back flights to the U.S. as Canadians cut down on trips to the now-hostile nation.

The drop in demand can also be seen in S&P Global Canada’s latest barometer of manufacturing activity that showed a sharp drop in March, following a decline in February as factories see fewer orders and less output.

The lower activity means 27 per cent of businesses are looking to reduce production capacity or head count, according to a survey from PwC Canada, but companies aren’t just accepting the hit _ almost three-quarters of responding businesses also said they’re looking to open or expand operations in other markets.

There have been temporary boosts to economic activity as companies prepare for the tariffs to come in.

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Shippers have raced to beat the shifting tariff deadlines, prompting a surge in cross-border cargo traffic. Freight volumes rose 25 per cent year-over-year in January and 58 per cent in February, according to transport data firm Loadlink Technologies.

The short-term boost was seen in January GDP numbers, which rose 0.4 per cent as manufacturing and oil and gas saw spikes in demand ahead of the Feb. 1 tariff deadline that ultimately got pushed back.

The ramp up in demand early in the year will mean a bigger hit later on, said Andrew DiCapua, principal economist at the Canadian Chamber of Commerce.

“We’re really sprinting into a wall,” he said in an interview late last week.

“These are sectors that are hit by tariffs and it makes a lot of sense as to why you’re seeing this push up in economic activity,” he said. “But that’s going to hurt us in the months to come.”

Small businesses see the writing on the wall as well. The Canadian Federation of Independent Business’ latest sentiment check plunged by half in March to a 25 point measure on a scale of 100, the worst on record.

— With a file from Craig Lord in Ottawa.

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