The trade war between Canada and its once closest ally is raging, and Collingwood businesses are already feeling attacked.
On March 4, U.S. President Donald Trump made good on his promise to implement tariffs on Canadian goods by adding a 25 per cent levy on Canadian exports to the United States, save for energy, which is subject to a 10-per cent tariff. In response on Tuesday, Canadian Prime Minister Justin Trudeau announced a series of retaliatory tariffs would be on the way for U.S. goods, promising more to come.
Since tariffs are taxes on imported goods, the people making the goods are caught in the cross hairs.
“Anxiety and stress are very high among our members right now,” said Trish Irwin, CEO of the Collingwood Chamber of Commerce.
She noted that locally-owned businesses invest back into their communities by providing local jobs, sponsorships and support of the local economy. The chamber is encouraging businesses to source materials and products from alternate sources to prepare for possible increased costs and disruptions in the supply chain, through other local businesses, provinces or countries not affected by the tariffs.
But that pool is getting smaller by the day.
“It is important for everyone to support local Canadian businesses and products – now more than ever,” she said.
Even just the speculation around tariffs has already hit some local businesses hard.
“In a nutshell, it’s going to add costs to everybody,” said Jeff Carrey, vice president of manufacturing at Goodall Hoses in Collingwood.
“At the end of the day, if the domestic producers in the U.S. can’t do it cheaply enough... They’re just going to be paying more for the products they’re already getting.”
“They’re getting it from other countries for a reason – either because it’s cheaper or they don’t have the capabilities or technology. The end result is not going to be what they want,” he said.
The Collingwood Goodall location currently has 30 employees and manufactures industrial rubber hose. They import materials from the company’s U.S. locations and sell completed hose to U.S. companies.
Carrey said Goodall had a hiring blitz and great year last year, adding a second shift in April and producing the most hose they had produced in several years. However, just the announcement of potential tariffs back in January sent shockwaves through their industry.
“We’ve seen a softening of the market and demand, and we had to react with our labour force,” he said.
Goodall has laid off four employees since January and there may be future layoffs to come depending on where the tariffs go.
“We’ve seen a significant drop in our demand this year compared to last year. We may have to reduce the labour force further,” he said.
To prepare for tariffs, Carrey said Goodall stockpiled materials early before the March 4 deadline. But that brought its own risks.
“It’s not always the smartest thing to do from an accounting perspective. What if we can’t turn that product around into sales in the near future?” he said. “We also shipped products to our U.S. customers ahead of the first tariff deadline.”
Goodall hoses are used in multiple industries including agriculture, oil and gas, chemicals, food and beverage.
“Those industries are going to have to pass that on to the end consumer,” he said. “At the end of the day, what is the end user going to pay for? They might reduce the consumption of the product or look for complementary products that are less expensive. It’s too early to tell.”
VOA Canada’s Collingwood factory, which manufactures seatbelts, will also feel the impact of tariffs.
“We have been in discussions with our customers for some time about how to handle the situation and the need to pass on the increased costs to our customers (the car manufacturers),” said a spokesperson for Autoliv, VOA Canada’s parent company in an email, while declining to provide further comment at this time.
‘Nervousness and anxiety’
Andrew Siegwart, local resident and president of the Tourism Industry Association of Ontario said the organization has been preparing for tariff threats since the U.S. election, and just presented the provincial government with ideas to help the tourism industry survive including encouraging cross-provincial collaboration, providing more provincial dollars into marketing through Destination Ontario, advocating for better transportation across the province and encouraging international conferences to come to Ontario communities.
“There is a lot of nervousness and anxiety that I see in operators,” he said in an interview. “At the same time, what I'm also hearing from operators is a resolve to the opportunities.”
Siegwart said about 50 per cent of tourism operators in Ontario spend between $10,000 and $100,000 on supplies or services from the U.S.
“With tariffs being implemented and counter tariffs, that's going to impact their costs right now. That's just a reality,” he said.
Siegwart said many of the tourism industry reactions to COVID-19, such as encouraging tourism within your own province, will serve the industry well in response to tariffs.
“I think there's a lot of muscle memory in this sector from how it had to respond over the last few years. I think that's actually going to be very helpful,” he said.
As of now, he said that 55 per cent of tourism spending in Ontario comes from Ontarians, while about 20 per cent comes from the Americans. He said this means Ontario tourism is unlikely to be severely impacted if Americans stop coming to visit.
“We have a strong domestic market,” said Siegwart. “We're blessed because Ontarians already shop in Ontario, but Ontarians are going to be put under pressure. That is a challenge for the sector.”
Siegwart said the Canadian sentiment against the direction the U.S. is taking can also impact tourism. He points to recent incidents of Canadians shouting during the U.S. anthem at sporting events.
“Some of the data points (are) starting to show that the American visitor is aware of that,” he said. “We haven't seen indicators that they're not planning to come to Canada, but it's a worry.”
Siegwart said he thinks tourism operators should consider courting markets they haven’t traditionally had in the past, such as tourists from the European Union, South America and overseas.
He said any concerned tourism operators in South Georgian Bay should be reaching out their own local destination marketing organizations to help in accessing networks such as the RTO7, Blue Mountain Village Association, Simcoe County Tourism or Grey County Tourism, and should consider collaborating with other local tourism operators on experiences.
“What operators need to be thinking about right now is: As I'm running my business, how diverse is my own marketing?” he said. “Am I partnering with the right folks who are going to the right markets?”
‘We saw this happen during COVID and are ready’
In February, Collingwood council voted to have the town only purchase Canadian products when practical, and have staff investigate and report back on further purchasing practices so Collingwood can prioritize buying Canadian moving forward, in response to the tariff threat.
At that time, Mayor Yvonne Hamlin called the threat of tariffs “economic warfare.”
According to the town’s manager of economic development Johanna Griggs, Collingwood is partnering with the County of Simcoe on a tariff impact assessment for local business owners to identify challenges by sharing specific ways tariffs will impact their businesses, and find solutions.
“With the diversity of businesses in Collingwood, both from a size and industry perspective, the impacts will vary across our local economy,” said Griggs in an email. “The current economic climate has created uncertainty, which has impacted consumer confidence and spending habits, resulting in lower sales during what would typically be a strong sales season in Collingwood and area.”
Griggs said Collingwood has a strong ecosystem to support the establishment of new businesses, and that won’t change under new tariffs.
“While there may be some trepidation to starting new endeavours, we also need to account for those that may be impacted by layoffs that are looking to entrepreneurship as a new career,” she said. “We saw this happen during COVID and are ready to support people in the same way.”
For small businesses, Tim Newton of the South Georgian Bay Small Business Enterprise Centre said the businesses he interacts with are reconsidering their product mix to reduce or eliminate dependency on the U.S.
“Some have also been buying forward, (by) ordering larger-than-normal volume of product to add a layer of price protection and to help weather this first bump, as there are concerns with sourcing products (through the U.S.),” he said. “Due to these concerns, businesses are interested in learning more about how to source directly and locally.”
Newton said the Small Business Enterprise Centre is busier now than it has been at this time of year compared to the last three years.
“I think this represents confidence in those considering start-ups of small business, regardless of the tariff threats,” he said.