With 1 week to go until 50% tariffs in U.S. kick in, Waterloo region businesses prepare for what may be next

With 1 week to go until 50% tariffs in U.S. kick in, Waterloo region businesses prepare for what may be next

Businesses hope 'this might not come to pass,' Kitchener-Waterloo chamber president says

With a week remaining before new U.S. tariffs are set to take effect, business groups in Waterloo region in southern Ontario are concerned about how the uncertainty may affect local businesses and manufacturers.

U.S. President Donald Trump announced in mid-July that the U.S. will impose a 50 per cent rate on Canadian exports to the U.S., including Canada-U.S.-Mexico Agreement (CUSMA)-compliant goods.

Trump has threatened tariffs in the past and then pulled them back, but it's unclear if that could happen in this case.

"There is nothing worse, absolutely nothing worse for business in terms of making decisions, investment decisions, business decisions, hiring decisions than uncertainty," Ian McLean, president and CEO of the Greater Kitchener Waterloo Chamber of Commerce, told CBC News.

U.S. officials said the move is a response to Canada's retaliation against U.S. trade policy. This includes the removal of U.S. alcohol from provincial store shelves, and Canada's alleged discrimination against U.S. motor vehicles and dairy.

The 50 per cent tariff also would come as Canadian officials try to work with their American counterparts on amendments to CUSMA.

The new rate would take effect on Aug. 19 if no deal is made.

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Trump's 50 per cent tariff plan is an unprecedented trade threat for Canada, with more than 500 Canadian products expected to be subjected to the new rate.

The U.S. listed the Canadian exports that would be affected by the tariff in three categories, namely:

McLean said the situation has garnered all kinds of reactions from local business owners — some feel "angry, upset at the Americans," while others are anxious.

"Others, they may be hoping that this might not come to pass," he said.

"No one's an expert. We're not an expert … and I'll tell you that those that are experts in this field, accounting firms, logistics firms, no one knows."

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Greg Durocher, president and CEO of the Cambridge Chamber of Commerce, said the tariff threat is causing some business owners to get "panicky."

Durocher did not specify any companies, but said some local businesses have told him they aren't sure how their previously CUSMA-compliant components will be affected by the new tariffs.

However, he said only "a very, very small percentage" of what Cambridge exports to the U.S. would be subjected to the new rate.

Durocher said his chamber has been working with customs brokers and consultants that help businesses navigate the current tariff situation by figuring out how much of their products would be affected by the new tariffs.

He said many businesses have, inadvertently through this process, found local suppliers, partners and buyers from within Canada.

"That's kind of the good news story out of what's happening," he said.

"We, the chamber, are starting to be able to work with companies to say, 'Well, why don't you try and find somebody locally that could do that or somebody in Canada that can do that.'"

Durocher recognizes that while looking for domestic alternatives may work for some businesses, it's not a universal solution.

CBC News spoke with industry sources who stated the Canadian government is preparing to meet some U.S. demands, including ending bans on American alcohol sales, considering lifting retaliatory tariffs on U.S.-made autos along with some changes on dairy — all in exchange for tariff relief.

CBC News has reported that Canada-U.S. Trade Minister Dominic LeBlanc and his American counterpart aim to present Trump "a path to a potential trade deal as early as Monday."

But the ongoing negotiations go beyond just the new tariffs. LeBlanc and Canada's chief trade negotiator, Janice Charette, are looking for relief on sectoral tariffs the U.S. has slapped on several Canadian goods including steel, aluminum, lumber and autos.

Canada also hopes the ongoing talks will help the two countries work on an extension of the CUSMA, which Trump declined to renew in July.

Why Trump is threatening new 50% tariffs on Canadian exports right now

"I think we have to trust that the federal government knows that a deal, by very definition, always requires give and take," McLean said about the trade talks.

"People want a good fair deal and they will not accept something that has us having a deal with the Americans on bended knee."

John Dalusong is a journalist for CBC Kitchener-Waterloo. Have a story? Reach him at john.dalusong@cbc.ca.

With files from Mike Crawley, Graeme Bruce, Peter Zimonjic, Kate McKenna, Katie Simpson and Darren Major