The United States is Canada’s neighbour, its largest trading partner, and its guardian – as viewed by certain Americans – see Mr. Trump’s recent tweet. We had to, recently, analyze the risk to a client’s industry given that their business would be, directly, impacted by the Trump Tariffs – see pie graph below on Ontario GDP by percent:
While we did not state a quantifiable impact from the Trump tariffs on the Ontario economy, in our opinion, many established supply chains will be affected; Specifically, we note that manufacturing, construction and transportation & warehousing (“Mctw”) make up almost a quarter of the gross domestic product, by percentage, in 2017. These industries along with finance (insurance and real estate), wholesale and retail trade make up approximately 50% of the gross domestic product, by industry, in 2017. Canadian Steel Producers Association’s president, Joseph Galimberti, stated that the tariffs are a baseless attack on the 23,000 Canadian households whose livelihoods are directly supported by employment in Canadian steel manufacturing. The graph below was released, last week, by the Bank of International Settlements as it, theoretically, analyzed the impact of the NAFTA Breakup on Canadian real wages by industry.
According to Jean Simard, President of the Aluminium Association of Canada, a “10% tariff applied to our 5.6 billion $USD of primary aluminum exports to the U.S. would increase the costs of the American downstream industry by more than 500 million $USD”. We are of the view that any tariff impact to certain key industries will negatively impact the earning potential of workers, leading to negative consequences in the housing market, in key hubs in Ontario such as Hamilton, Sault Ste. Marie, among others.