Local manufacturers worry and plan for hard hit of American tariffs

As politicians scramble to figure out how to stave off proposed American tariffs on Canadian goods, London-area manufacturing leaders are making contingency plans to keep their businesses going in the face of massive uncertainty. 

President-elect Donald Trump has said he would impose 25 per cent tariffs on all Canadian products entering the United States unless Canada tightens border security. 

"We're definitely concerned, and we're definitely talking about it," said Paul Smith, president of Arva Industries, a St.Thomas-based company that designs and manufactures equipment for the rail and mining industry. 

The company employs 47 people and does a lot of business within Canada as well as in Mexico and Latin America on the mining side. On the rail side of the business, customers are in Chicago, Philadelphia and New York City. It would be that side of the business that would take the biggest hit if tariffs were imposed, Smith said. 

"You have to prepare. We're trying to see if we can turn ourselves into more of an engineering company and less of a manufacturing company, so we'd find places in the United States to manufacture our products, especially on the rail side. In fact, we're meeting with a company next week that offers that service. That's our mitigation." 

Getting the rail cars manufactured in the United States would cost the company about 60 per cent of the value of any contract, Smith said. "It's a concern." 

U.S. steel, orange juice on list of Canada’s retaliatory tariffs: Source

2 days ago

Duration 3:27

A senior government source has told CBC News that a list of potential retaliatory tariffs includes U.S. steel and aluminum, ceramics and orange juice. But they would only be imposed if U.S. president-elect Donald Trump follows through with his tariff threat on Canadian goods.

Etienne Borm is the president of Etbo Tool and Die Inc., outside of Aylmer, which has about 200 employees who design and build the processes and automation that make and assemble auto parts, and manufacture a variety of different parts. Tariffs would be a "significant problem" for his company and manufacturers in Canada more broadly, he said. 

"Mr. Trump has a way of negotiating with strong language and I fully expect that there will be some sort of tariff, hopefully short term, for him to claim a win on some of his goals," Borm said. "Hopefully it's short-lived and we can find a way through that. We just have to hope that calmer and cooler heads prevail." 

Business leaders know how to keep calm in the face of uncertainly, Borm said. "I'm reasonably confident that there's going to be some sort of negotiated solution at the end of the day where at least optically, the incoming president gets a win and we can move on." 

Borm and other business heads are looking at where he can allocate new business to avoid the tariffs, he said. 

Uncertainty difficult to plan for

Harry Laidlaw is a the general manager at Takumi Stamping, the Canadian subsidiary of a Japanese company based in St. Thomas, which employs about 350 people and builds automotive parts for Toyota. About 30 per cent of its product gets shipped to the United States and the rest to plants in Canada. 

"I'm very worried about this. Financially, in terms of profit and loss, it would have a big impact because we ship down to Indiana and Kentucky. The people that I work with are very concerned about it. They're worried about job security and in general business for Canadians," Laidlaw said. 

One of the biggest issues is the uncertainty, he said. "We don't know what's going to happen and that's the core problem. We don't know how much is rhetoric and how much we can take (Trump) at face value." 

A solution will have to be found that includes Canadian premiers, businesses leaders and federal officials, said St. Thomas Mayor Joe Preston. "They buy a lot of our stuff and we buy a lot of their stuff. We are great trading partners," he said. 

Most seasoned business people are excellent forward thinkers but are able to think on their feet and react to difficult situations, Preston added.

"It's an unknown environment and one person making a lot of noise. Whether it's the bully in the school yard or a powerful business person who is bombastic, you listen and think 'What need can I fill in that man's heart?' We have to look at that as a whole country."